Commercial vehicle sales back on track in October…!!!
Sales of these trucks with payload capacity of at least 7.5 tonnes are estimated to have increased 12.7% from a year earlier to 23,874 in the past month, said industry sources.
Sales of medium and heavy trucks picked up in October after three straight months of decline, suggesting an improvement in the macroeconomic scenario as demand in the segment is seen as a barometer of economic activity.
Sales of these trucks with payload capacity of at least 7.5 tonnes are estimated to have increased 12.7% from a year earlier to 23,874 in the past month, said industry sources. Stable freight rates and increased load availability have helped push sales last month, with some replacement demand also kicking in, manufacturers said.
These, coupled with some pre-buying before the BS-IV emission rules come into force in April 2017, as well as government programmes drove sales, said Rajesh Kaul, head of marketing for trucks at Tata Motors, the CV industry leader. “We also saw some growth coming in due to load availability in the cement segment.” Increased activity in the agriculture sector is another factor helping truck sales.
“The monsoons have been good, triggering a revival in the rural economy . This is playing a significant role in spiking up demand, resulting in an increase in goods movement and consequently in truck sales. Besides, better availability of finance and lower interest rates are helping boost sales,” said Vinod Aggarwal, managing director at VE Commercial Vehicles.
Increased construction activity due to the government’s focus on infrastructure development aided growth in the tipper space and this trend is likely to continue, said industry executives.
In the CV segment, Tata Motors posted its highest monthly volumes this year -October sales, including of light vehicles, increased 15% to 30,169 units. While sales of light commercial vehicles went up 21%, volume of medium and heavy vehicles rose 9%. The upward trend was seen also in the numbers at Ashok Leyland, where sales of commercial vehicles rose 28% to 12,533 units. Sales of Eicher-branded trucks and buses increased 11.2% to 3,854 units in the domestic market.
The growth in medium and heavy CV (MHCV) sales in October has come after three consecutive months of decline. Data available with industry body Society of Indian Automobile Manufacturers (SIAM) show MHCVs sales dropped 7.6% in July and 10.8% in August. In September, the decline was sharper at 20.6%, dragging down overall sales in the commercial vehicle segment to the red at 61,621 units.
Apart from sluggish demand for freight, Kaul explained: “Decline in CV sales over the last few months was primarily related to fleet operators postponing purchases, with an expectation that the newly proposed GST would bring down the prices of vehicles. This, coupled with a high base effect (from last year), resulted in slow M&HCV sales.
“Commercial vehicle makers are cautiously optimistic of the momentum registered in October continuing further into the second half of the fiscal year. Kaul said: “Growth is expected to be good in comparison to H1, on account of clarity on GST rates (and) implementation of BSIV from April 2017, which will lead to higher vehicle pricing and, therefore, prebuying.” However, a high base may weigh on the H2 comparison.
A lot would depend on the GST rates that would come into effect in April. On Thursday, the government unveiled a four-tier framework, with rates ranging from 5-28%, but there isn’t yet clarity on product-wise tax.
“If the peak rate is charged for commercial vehicles, there will hardly be any price benefits on account of GST and there will then be pre-buying before BS-IV norms becomes applicable from April 2017. BS-IV will raise prices of CVs by 7-8%,“ said Aggarwal. “However, if rates are lower, consumers maypostpone purchases.”