Commercial vehicle sales fall YoY, but grow MoM by 10-15% in Dec 2019

India's second-largest CV manufacturer Ashok Leyland reported a 29 per cent drop in overall domestic sales.
The sales of commercial vehicles (CV) remained slow year-on-year in December 2019 as the automobile sector continued to reel under the pressure of an economic slowdown. However, the month-on-month sale witnessed a growth of 10-15 per cent owing to pre-buy and heavy discounts. Tata Motors, the country's largest CV manufacturer, reported a 13 per cent drop in domestic commercial vehicle sales at 31,469 units in the previous month from 36,180 units, a year ago.

"Retail was higher than offtake by around 13 per cent in December, with further stock reduction, as we move closer to BS-VI transition. Overall sales continued to grow for second month in a row, with Medium and Heavy Commercial (M&HC) vehicle sale being higher than November 2019 by 15 per cent after posting a 23 per cent growth last month,” said Girish Wagh, President, Commercial Vehicles Business Unit, Tata Motors.

The company's M&HC vehicle sales were down by 40 per cent to 6,957 units in December 2019 from 11,506 units in the corresponding month in 2018, while they rose by 15 per cent from 6,050 units sequentially.

Earlier, Tata Motors CEO and MD Guenter Butschek told PTI that the growth in CV industry was related to the country's economy. "The government has launched various initiatives...all these factors are going to give it a positive outlook in the second half of the next fiscal. While the transition to BS-VI in passenger vehicles (PV) is on track, the company is going to be slow in introducing upgraded CVs in the market due to low demand," he added.

Meanwhile, India's second-largest CV manufacturer Ashok Leyland reported a 29 per cent drop in overall domestic sales to 10,378 units in December 2019, as compared to 14,718 units, a year ago. However, month-on-month sales was up by 10.67 per cent from 9,377 units in November, 2019. The sale of trucks, one of its major products, was also down by 59 per cent in December to 3,809 units from 9,237 units, a year ago but rose by 10.50 per cent compared to 3,447 units in November 2019.

Ashok Leyland witnessed a rise in the sales of buses by 85 per cent to 2,560 units in December 2019 from 1,384 units, a year ago. Overall M&HCV business fell by 40 per cent to 6,369 units from 10,621 units, a year ago, while it increased by 20 per cent on month-on-month basis.

Similarly, VE Commercial Vehicles (VECV), a Volvo Group and Eicher Motors joint venture, reported a decline of 19.1 per cent in total sales at 5,042 units in December. The company sold 6,236 units in December 2018, VECV said in a statement. Eicher- branded trucks and buses recorded a sale of 4,910 units in December 2019 as compared to 6,113 units in December 2018, witnessing a decline of 19.7 per cent, it added.

 

In the domestic market, Eicher's trucks recorded a 13.7 per cent drop in sales with 4,410 units being sold in December 2019 as compared to 5,112 units in December 2018.

Analysts said that one of the reasons for the growth in month-on-month sales was the heavy discounts being offered by companies. "Discounts and offers have started tapering off due to lower inventory levels. Light Commercial Vehicles (LCVs) continue to do better than M&HCVs," Motilal Oswal said. They further expect that lackluster infrastructure and low construction activity will continue to keep demands subdued and a strong recovery is unlikely until the second half of 2020-21.

However, the orders for buses from several state transport unions are likely to provide some relief to these companies. 

 



Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel