Truck Sales Remain Stagnant, May Revive in Q4
Published On Oct 13, 2016
After a good start in the first quarter of this fiscal year, medium and heavy commercial vehicle (M&HCV) sales gradually declined at the end of Q1 and continued till Q2. Although September sales reports of some commercial vehicle makers showed encouraging results, overall sales fell for the third month in a row. Seeing the on-going trend, experts have stopped pinning high hopes and believe that sales for this financial year will remain mostly flat. However, Q4 may witness a sudden spur in truck demand due to future regulations which may help revive numbers for this year.
The major factor for the current slack is the uncertainty over the GST Bill to be implemented, which includes anticipation regarding warehouse restructuring and availability of discounts. Weak replacement demand, less cargo transportation from industries, and slump in mining and construction activity due to heavy rainfall are some of the other reasons which may lead to a stagnation in sales of M&HCVs.
However, the overall increase in the economy due to increase in industrial and agricultural output may lead to a rise in transportation needs, hence improve sales. Also, the BS-IV emission norms to be implemented in April 2017 will may lead to a sudden per-buying in the last quarter of this financial year. Growth in construction, mining and infrastructure segment plus stricter overloading regulations may help the segment reach sales numbers similar to that of last year, if not more. These thoughts have also been backed by the ICRA which predicts that the industry is going to revive soon, predictably in the second half of this fiscal year.
Ashok Leyland, Tata Motors and Mahindra & Mahindra reported a drop in sales of M&HCV last month. Considering commercial vehicle sales in September as compared to the same period last year, Tata Motors witnessed a two percent decline, Mahindra displayed a growth of 11 percent, Ashok Leyland registered a drop of 18 percent, VECV rose by 14 percent whereas SML Isuzu fell by 5.3 percent.