M&HCV sales slide continues in September

Drying replacement demand, less-than-expected Q1 GDP growth numbers and falling coal production has adversely affected demand for the medium and heavy commercial vehicle (M&HCV) segment as sales fell for the third month in a row.

Sales numbers for September 2016 from various OEMs are indicative of a trying time for the M&HCV industry. Ashok Leyland, Tata Motors and Mahindra & Mahindra have reported lower sales in September.

Speaking to Autocar Professional, Sunny Manjani, consultant, Frost & Sullivan India, said: “FY2017 sales are expected to be flat. However, the upcoming BS VI emission norms will see pre-buying which will help the fiscal post a growth of 12-15%. Despite the fall in M&HCV sales in the past three months, numbers are expected to pick up following a good monsoon in parts of the country and rising consumption on the back of the festival season. There is still uncertainty regarding the final rate of GST; a lower rate is expected to bring truck prices down and due to this customers are delaying their buying decisions,” he said.

According to the Indian Foundation of Transport Research & Training (IFTRT), which tracks truck movements in the country, “September truck rentals went up by 4-5% on trunk routes with improvement in truck fleet round trips by 15-20%, leading to significant improvement in existing fleet utilisation as arrival of fruits, vegetables, pulses and other food items into APMC’s  ‘Anaj Mandis’  by 20-25%. Also, after about 4-5 months, cargo shipments from the manufacturing sector too have displayed 10-15% extra movement with small and medium manufacturing units (SMEs) taking the lead due to demand for festival season items across the country. There’s more demand coming from Tier-2 and Tier-3 cities in terms of higher consumer spending and increased salaries of government employees due to Seventh Pay Commission payments. The overall factory output from consumer durables, cement, construction materials, paints, motor car/vehicle/tractor transportation, fertilisers and general merchandise have also seen extra movement from production centres to retail markets during September 2016.”

In the monthly sales, Tata Motors‘ overall commercial vehicles sales remain negative. The company sold 28,360 CVs in the domestic market in September 2016, down 2% (September 2015: 29,039 units. Sales of Tata M&HCVs plunged consecutively for the third month. However, saving the blushes for the company, its LCV sales continued their upward trend by notching 19% growth in September 2016.

Ashok Leyland’s total numbers declined 18% YoY with sales of 12,057 units (September 2015: 14,783 units). Like Tata Motors, its M&HCV numbers saw a sharp 26% decline with sales of 8,963 units (September 2015: 12,146 units). LCV sales though grew by 17% with sales of 3,094 units. (September 2015: 2,637 units).

Mahindra & Mahindra’s total commercial vehicles sales were up by 11% with sales of 16,081 units (September 2015: 14,430 units). Its M&HCV sales fell by 29%, with sales of 364 units (September 2015: 511 units). Demand for the below-3.5T GVW products rose by 14% growth with sales of 15,282 units (September 2015: 13,460 units), while those in the above-3.5T GVW segment decreased 5% YoY with sales of 435 units (September 2015: 459).

VE Commercial Vehicles maintained its double-digit growth with 20.16% with total domestic sales of 4,148 units in the domestic market (September 2015: 3,452).