Commercial vehicle production in India has dipped since Dec 2016
According to SIAM statistics, the entire commercial vehicle segment has been witnessing flat-to-negative production growth since December 2016 and March 2017 too should not be any different.
Despite the brouhaha over unsold Bharat Stage III or BS-III stock, the commercial vehicle industry has actually produced substantially less numbers from December 2016 to February 2017, compared to the year-ago period, and looks like March will also be flat to negative said industry sources.
The data goes against the suspicion that some commercial vehicle makers upped production of BS-III vehicles in the run-up to the April 1, 2017 cut off – to service customers reluctant to spend more on the BS IV compliant vehicles – thus building up the 75,000 unit-strong unsold stock, say sources.
According to SIAM statistics, the entire commercial vehicle segment has been witnessing flat-to-negative production growth since December 2016 and March 2017 too should not be any different. The industry clocked a near 5% drop in February production at 71,899 units compared to 75,545 units in February last year.
In January 2017, production was almost flat-negative at 70,988 units, down from 71,197 units in previous year. In December the fall was a sharp 19.3% from 65,697 units in 2015 to 52996 in 2016. “March data so far also seems to suggest that there will be flat to negative growth compared to the 82102 units that were produced in March 2016,” said an official from the industry.
While SIAM’s compilation will track the inventory pipeline at the factory gates and dealerships, it will still not capture the stocks lying at body-building companies.
Truck buyers often buy just the chassis and the cabin and body are built separately.
“At any given point, there will be a substantial number of vehicles at these body building companies but our inventory count will not calculate these as these vehicles are already sold and have left the factory gates,” said the CEO of a CV major.
The trouble, say CV marketers, is that customers are not willing to buy BS-IV vehicles right now because of the cost differential. “In the case of trucks, the price differential is 7-10% prompting customers to delay purchase,” said a senior CV marketer.
The CV industry has been in the middle of a controversy over whether the April 1, 2017 deadline applies only to production or to registration as well. One section of manufacturers say it means both registration and production while others say it pertains only to production so the unsold stock can be sold even after April 1.
“Technically companies can continue making BS-III vehicles till March 31 because the government order is on production, not registration,” said another marketer. “In 2005 and 2010 too there was this problem of unsold stock. The necessary notifications and clarifications are in place. So why create confusion?”