November CV sales ride high on strong demand for lower tonnage vehicles

Topics CV sales | M&M | Ashok Leyland

Truck market leader Tata Motors dispatched 26,218 units during the month
Commercial Vehicles sales, a key barometer of economic activities, either narrowed the decline or rode into positive terrain for most manufacturers for the first time in November after the nationwide lockdown, shows monthly sales data released by the manufacturers.

Cumulative dispatches at top four manufacturers including Tata Motors, Ashok Leyland, Mahindra and Mahindra and Volvo Eicher Commercial Vehicles (VECV) advanced 1.21 per cent to 58,211 units in November from 57,510 units in the same month a year ago. Auto firms in India count dispatches to dealers as sales.

Besides a last year’s low base, the light and intermediary commercial vehicles (ICVs) sales boosted the overall volumes.  E-commerce companies which deploy such vehicles for the last mile deliveries have been fuelling the demand. A bumper kharif crop and an overall pick in consumables have also helped.    

Truck market leader Tata Motors dispatched 26,218 units during the month—5 per cent lower year-on-year. The overall volumes at the Mumbai based firm were dragged down by the Medium and Heavy Commercial Vehicles (M&HCVs) which declined 6 per cent year-on-year even as it rose 13 per cent compared to October, indicating a turnaround in demand for heavy duty trucks. These vehicles have their fate closely linked to the overall economic activities. The fall in M&HCVs were made up by the ICVs which grew 11 per cent year-on-year.

India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 per cent and held out hopes for further improvement on better consumer demand.

Total dispatches at Ashok Leyland grew 4 per cent y-o-y to 9727 units. It was led by a brisk 23 per cent increase in M&HCVs (trucks) and a 31 per cent jump in light commercial vehicles sales.  

Mahindra and Mahindra showed a similar trend. Its overall dispatches during the month increased 17 per cent year-on-year to 19029 units, the company said. It was also led by an increase in demand for LCVs less than 2 tonnes and the vehicles between 2 to 3.5 tonnes.   They advanced 19 per cent and 9 per cent respectively. Meanwhile, selling higher tonnage vehicles—those above 3.5 tonnes remained a challenge for M&M.

In line with the broader trend, Volvo Eicher Commercial Vehicles (VECV) saw its overall dispatches increase 4.4 percent y-o-y to 3237 units.

CV wholesales missed estimates due to lower LCV volumes while M&HCV volumes reflected good recovery, with volume decline restricted to 9.6 per cent y-o-y.   LCV volumes grew just 2 per cent y-o-y, Jinesh Gandhi, analyst at Motilal Oswal wrote in a research report.  “Tata Motors CV volumes decline was below estimates. On the contrary, VECV was in line with estimates,” wrote Gandhi.

Commercial vehicles (CV) volumes are expected to shrink 25-28 per cent this fiscal amid multiple headwinds along with the pandemic impact, and the outlook for the sector remains "negative" on the back of continuing challenges, ratings agency ICRA said last month.


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