Indian Commercial Vehicle Segment on a Bumpy Ride
Published On Jun 19, 2017
India’s commercial vehicle segment is witnessing difficult times due to decelerated economic activity and other factors that are hampering its growth. The industry continues to show negative sentiments and according to experts, chances of recovery in near future also seem to be bleak.
The slowdown was reported by almost all the manufacturers with the top players posting double digit fall in sales. In May 2017, where Tata Motors registered 13 percent drop by selling 23,066 units as compared to 27,026 units in the corresponding month last year, Ashok Leyland saw 8 percent decline in its overall CV sales while its M&HCV division witnessed upto 18 percent decline. A more severe blow was faced by Tata Motors with the medium and heavy commercial vehicle division saw 40 percent drop in sales recording just 6,522 units last month.
The primary reason for the weak sales has been attributed to the BS-III vehicles ban that came into effect April 1st, 2017. However, the light commercial vehicle division of some manufacturers such as Ashok Leyland showed positive growth in the month and is expected to grow further getting boost from GST implementation. The trend seems to continue for several months due to abundant pre-buying in the three days discount period before the ban.
The BS-IV vehicles sales still need to pick up pace as people need to be accustomed with the latest standards as well as the shortage of fuel injection pump is derailing the sales from track. According to India Ratings and Research, the M&HCV segment has been witnessing a constant downfall since 2011 including the worst decline of 55 percent in April 2017 for medium CV category and 73 percent in the heavy commercial vehicles segment.
The manufacturers who failed to introduce the BS-IV technology on time has raised the prices of newly introduced BS-IV vehicles, which also resulted in weak sales. Presently, it seems the first quarter is far from recovery and only after the GST implementation and good monsoon, the sales numbers is expected to show positive sign of growth.