Smoother ride for commercial vehicles as economy recovers

 
According to industry players, the commercial vehicle (CV) segment, which returned to positive territory in July after witnessing a downturn for 11 months, is likely to see encouraging sales in the coming months.

As per the Society of Indian Automobile Manufacturers (SIAM) data, the CV sales in July was up by 9.61 per cent at 37,624 units compared with 34,325 units in the year-ago period. Sales in August also soared by 18.48 per cent at 40,624 units compared with 34,289 units in the same period last year.

As SIAM Senior Director Sugato Sen pointed out, CV sales is intrinsically linked with activities in the infrastructure sector, which is a key driver of the economy. "A lot of activities in the infrastructure sector are going on," Sen said explaining the reasons behind the improved sales of CVs in India in the past few months, adding the growth trend is expected to continue.

India's infrastructure sector witnessed a growth rate of 7.1 per cent in August, an indication of a recovery in the economy, which has been reeling under the global financial crisis since the third quarter of 2008-09.

Major commercial vehicle makers are also optimistic, albeit cautiously, that the recovery in the economy will help them register better sales. "When this development (renewed demand of CVs) is taken together with industry numbers, the GDP and the IIP growth rates, it definitely reflects a positive sign towards demand revival," VE Commercial Vehicles Executive Vice-President (Marketing and Aftermarket) Somnath Bhattacharjee said.

Expressing similar views, a Tata Motors spokesperson said: "Growth (CV sales) is being seen on the back of growth in the economy, for example in the construction sector in the North, and the slow recovery in the manufacturing sector in the south and the West."

Although Tata Motors had witnessed a 14 per cent decline in its cumulative sales of medium and heavy commercial vehicles (M&HCV) during April-August period this fiscal against the corresponding period last fiscal, it has seen sequential improvement in M&HCV sales since January this year.

Similarly, Ashok Leyland, another major CV maker, has also registered an increase in M&HCV goods carrier sales in August despite a decline in its total CVs during the fiscal. Its M&HCV sales last month stood at 2,880 units as against 2,633 units in the same month last year.

Another CV maker VE Commercial Vehicles has also seen improvement in goods carrier sales at 1,899 units in August as against 1,472 units in the same month last year. The industry players are, however, just not ready yet to declare that it will be a smooth drive ahead.

"If we get one more month of positive CV sales, then we can really say that the Indian economy is coming out of the slowdown," Sen said. Tata Motors spokesperson was more guarded. "We are cautiously optimistic about the commercial vehicle industry. A more secular growth is expected to be seen as the economy picks up."