CV sales rise 11% in November on low base, pickup in economic activity

Had it not been for shortage of CNG kits and semiconductors, overall sales would have expanded more, say industry players

A pick-up in the economic activities and low base of last year pushed up commercial vehicles sales in the domestic market in November year-on-year for most manufacturers.

Cumulative sales at the top CV makers rose 11 per cent to 59,872 units over the same period a year ago.

“Had it not been for the shortage of CNG kits and semiconductors, the overall sales would have expanded more,” said Vinod Aggarwal, managing director and chief executive at Eicher Motors. Half the demand in the 5-16 tonne segment has now shifted to CNG.  This caught the kit makers unaware, explained Aggarwal.

Commenting on the recent cut in diesel prices and its impact on transporter’s viability and new truck purchase he pointed out that the replacement demand hasn’t been very strong. According to him, the transporter’s viability, particularly the ones that own small fleets continues to be under pressure despite of a diesel price cut.

The diesel prices have jumped 50 per cent in the last 18 months.  Fuel accounts for 60 per cent ownership costs for the transporters, so the freight rates have to go up by at least 30 per cent to compensate for increase in the fuel prices, said Aggarwal.

“While the Centre and some state governments have cut taxes on diesel, there was a decline in the movement of freight in November because of slower industrial activity. The quantum of freight moved was flat to negative a month after the pre-festive buzz in October,” wrote Hemal Thakkar—director, Crisil Research  in Freight Signs’ released by Crisil Research on Friday.  The Crisil PAN India Freight Index fell to 114 in November from 122 in October.

But transporters are not complaining. “The diesel price cut has come as a huge relief. We are now able to breath we were otherwise always struggling to make ends meet. This was a long pending demand,” said Balmalkit Singh, proprietor, Bal Roadlines.

According to SP Singh, senior fellow at Indian Foundation of Transport Research and Training (IFTRT) freight rates on key trunk routes went up by 5-6 per cent month on month in November on back of a robust factory output.  “November has been the best in five years,” he said.   This is in contrast to a drop in rates one had expected after the diesel price cut but a good availability of cargo ensured that the price remained buoyant.