Companies see Budget 2020 farm, infra push helping commercial vehicle sales

Tata Motors, Ashok Leyland, VECV Ltd report modest growth as economy slows and transporters are saddled with surplus capacity.

The Union Budget will perk up commercial vehicle (CV) sales held up by a slowing economy and transporters saddled with surplus capacity, said industry representatives as companies reported their latest figures.

Tata Motors' sales in domestic commercial vehicle sale dropped by 15 per cent in January 2020 to 31,348 from 37,089 in January 2019. The company’s Medium and Heavy Commercial Vehicles (M&HCV) saw a 41 per cent drop to 6,914 units from 11,694 units a year ago. Total domestic CV sales dropped by 26 per cent to 279,947 units from 378,664 units, a year ago. M&HCV sales dropped by 46 per cent to 67,145 units from 12,33,41 units, a year ago.

Girish Wagh, president of Commercial Vehicles Business Unit at Tata Motors, said his company’s retail sales were better than wholesale for the seventh straight month, reducing inventory before the country adopts BSVI emission standards. Tata’s M&HCV sale in January 2020 was second highest in last seven months. Small commercial vehicles did better than other segments, resulting in a y-o-y growth of 2 per cent.

Ashok Leyland’s M&HCV domestic sales dropped by 49 per cent in January 2020, from to 6,949 from 13,663 units a year ago. M&HCV trucks sales dropped by 60 per cent, but sales of bus rose by 30 per cent in January. M&HCV trucks in the domestic market stood at 4,837 units as compared to 12,042 units, a drop of 60 per cent. Bus sales rose to 2,112 units from 1,621 units. Light commercial vehicles sales dropped by 20 per cent to 3,901 units from 4,870 units.

Total vehicles sales in domestic market dropped by 41 per cent to 10,850 units in January from 18,533 units.

Vipin Sondhi, MD &CEO, Ashok Leyland said that the Union Budget’s allocation of Rs 2.83 trillion for agriculture, irrigation and rural development will help the CV industry as it will lift up the rural economy. The Budget’s proposal to spend Rs.100 trillion on infrastructure in five years will build demand for commercial vehicle too.

Overall economic activity and job creation will increase demand for goods and consumption and Increase freight movement on trucks, he said.

Anuj Kathuria, chief operating officer at Ashok Leyland, has said that M&HCV industry would close the fiscal (2019-20) with total sales of around 2,00,000 units, a drop of nearly 46.23 per cent compared to last year.

Total industry volume in 2019-20 would be around 2,00,000 units as against 3,72,000 units, last year, a drop of nearly 46.23 per cent. M&HCV volume during 2019-20 (April to December) dropped by 36.39 per cent to 1,76,202 units as against 2,78,319 units, a year ago.

VE Commercial Vehicles Ltd (VECV) said that in the domestic CV market, Eicher branded trucks & buses have recorded sales of 4871 units in January 2020 (YTD 37762 units) as compared to 5177 units in January 2019, representing a decline of 5.9 per cent. Volvo Trucks has recorded sales of 156 units in January 2020 (YTD 937 units) as compared to 98 units in January 2019, representing a growth of 59.2 per cent.