Tata Motors Sales Decline by 17% in November 2016
Published On Dec 06, 2016
Tata Motors, the leading commercial vehicle manufacturer in India, has reported disappointing sales numbers last month, as compared to the same period the last year. While certain segments, such as the construction sector, absorbed a good number of vehicles, cargo sales witnessed a huge drop. Overall, the commercial vehicle sales fell by 17 percent in November 2016 on a YoY basis, drawing concern over the overall performance of Tata trucks for this fiscal year.
While sales of light commercial vehicles (LCVs) and small commercial vehicles (SCVs) fell by 13 percent in November 2016 taking into consideration sales in the same month last year, cargo truck sales in the medium and heavy (M&HCV) segment saw a bigger drop of 28 percent. Total sales numbers of commercial vehicles stood at 20,538 units, which were 3,492 units lower than the numbers reported in November 2015.
The most probable reason for the downfall could be demonetization, which severely affected long haul cargo operators. Although the Diwali season looked promising for the commercial vehicle industry, the government’s regulations on removing notes of higher denominations from circulation left many operators high and dry and forced them to defer purchases. As per a report by ICRA, an Indian credit ratings agency, the trucking industry witnessed a sharp decline of 15 to 30 percent in the post-demonetization period.
The only silver lining in Tata’s sales report was the construction segment which witnessed a promising growth of 46 percent. This can be attributed to the increase in mining and construction activities after the end of the monsoon season.
The demonetization effect has weighed heavily on all major truck manufacturers, except Ashok Leyland. While Mahindra, VECV and SML Isuzu reported a fall in sales numbers on a YoY basis, Ashok Leyland registered encouraging growth in November 2016.