Truck makers reported a moderate sales in June

After nationwide lockdown, plant closure, and complete halting of retail sales, truck makers reported a near 90% drop in June wholesale numbers after complete wash-out of April and partial opening in May. Like the rest of the economy, the demand for trucks likely is sluggish; OEMs are pinning hopes for some economic recovery and increasing industrial activities to drive demand for trucks in the next few months. 

The Indian economy is slowly coming out from the prolonged shutdown after the COVID-19. The manufacturing activities took off after the reopening of the plants in May. Yet, it is a tough road towards recovery, and the automotive industry consists of a chunk of the manufacturing activities in India, crawling back to normal. 

Commercial vehicle sale, in particular, is directly linked to the underline economic growth, which is quite bearish. Even in these challenging times, truck manufacturers are looking to ride out from this storm. After near wash-out of April and partial opening in May, the June CV sale is off to a moderate start. Post the lifting of lockdown in large part of the country, June retail sales kick-off across the country, with OEMs throwing their retail outlets open for customers. Yet, it is evident that the sales remain highly suppressed as fleet operators and individual buyers remain cautious before going full-throttle for the new truck. 

Market leader Tata Motors is now following the practice of announcing quarterly sales numbers instead of a month. Speaking on the company's performance in the first quarter, Girish Wagh, President, Commercial Vehicles Business Unit, Tata Motors, said, "Amidst subdued demand environment, Q1 was marked by a successful transition to BSVI across the range of commercial vehicles. Domestic wholesale for Q1 FY21 was 9,274 units, a 90% drop over Q1 FY20. As the country moved to the unlock phase, all plants started operations from the end of May and ramped up production gradually as parts availability improved. Retails was 67% behind wholesales due to negligible opening inventory at the dealers and muted demand."

"There are early recovery signs in a few sectors, and we look forward to a gradual pickup in demand on the back of overall economic recovery, while we continue to address the challenges of intermittent demand and supply disruptions from COVID-19", he added.

Commenting on the performance, Veejay Ram Nakra, Chief Executive Officer, Automotive Division, M&M, said, "The automotive industry has started to see recovery both in the passenger and small commercial vehicle segments. This has been led primarily by rising rural demand and movement of essential goods across the country. Our key brands, such as Bolero, Scorpio, and Pik-Ups, are all seeing good traction. Managing the supply chain will be our key focus area as we ramp up production to meet this increased demand." 

OEMs sales in June

The market leader Tata Motors' switched to announcing quarterly sales numbers instead of a month. In the first quarter, i.e., April-June 2020, the company sold a total of 9,274 units of commercial vehicle sales in the domestic market, down by about 90%. The M&HCV truck 2,117 units, ILCVs 928, passenger carrier 325 units, small commercial vehicle, and pick up 5,904 units. 

Ashok Leyland's June sales in the domestic market were 2,132 units, a drop of 82%. It sold 572 units of medium and heavy commercial vehicles and 1560 units of the light commercial vehicle. 

Mahindra & Mahindra has done better in the overall CV sales partly due to the demand for small commercial vehicles with the dominant presence of the Bolero range of pickup. The company sold a total of 10,417 units CVs, a fall of 36%. The M&HCVs 51 units, the below-3.5T GVW segment, sold 10,332 units, and those in the above-3.5T GVW segment 34 units. 

VE Commercial Vehicles sold 1,321 units in the domestic market, down by 70.7%.

The massive fall in monthly numbers is apparent due to the unprecedented COVID-19 pandemic. Over the next few months, the commercial vehicle industry awaits some recovery and uptick in demand for trucks as the country starts to get back to the pre-COVID level. Meanwhile, OEMs aim to address the production bottleneck to restore the product and support the customer in his transport and logistics business. 

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