Tata Motors expects its CV sales to grow by over 36-38% in FY22

New launches, economic recovery and government spending on infrastructure to drive growth, says Girish Wagh

Tata Motors expects to grow more than 36 per cent in Financial Year 2021-22 (FY22) helped by its new models and the economy recovering after the coronavirus pandemic’s economic impact, said a top executive of the company.

“Our target is to grow more than the industry and strengthen the leadership position,” Girish Wagh, president, commercial vehicle business unit at Tata Motors, told Business Standard about plans made by India’s largest commercial vehicle maker by sales.

Crisil Research expects commercial vehicle sales to grow year-on-year (y-o-y) by 36-38 per cent in FY22. The industry is expected to end FY21 with 577,000 to 589,000 units: a year-on-year decline of 20-22 per cent. This will be half of FY19 volumes.
 

Wagh said the trend of “tailwinds” being stronger than the “headwinds” and a projected double-digit growth of the GDP in the next fiscal gives credence to the high growth estimates by various research agencies.

Cost saving, product upgradation, and new launches make Wagh confident that the company can outperform the broader market.

On Thursday, the company launched a new range of Intermediate and Light Commercial Vehicles (ILCV) under the Ultra Sleek T brand. Priced at Rs13,99,000 (ex-showroom) the new offering, that boasts of SUV-like cabin comfort, connected features and improved noise, vibration and harness (NVH) levels is primarily targeted at the e-commerce segment that has been fueling demand for last mile delivery vehicles. Tata sells the 407 in the segment currently.

The new model will sell alongside the existing range. Tata Motors sells close to 5000 to 6000 units in the ILCVs and commands close to 46-50 per cent share. The modular platform will give the company a wider play in the goods carrier segment straddling both the ICVs and LCVs, said Wagh.  

The commercial vehicle industry right now is in a rebound phase but getting to the FY19 levels will take time, said Wagh. “Typically, after a downturn, it takes anywhere between 3-5 years to get back to the earlier peak.  It also means if the industry starts growing from next year, it will grow for three to five years before the next down cycle kicks in.

In addition to all the ongoing infrastructure projects, the-Rs110 lakh crore National Infrastructure Project (NIP) augurs well for the CV industry and will have an indirect and direct impact. “As NIP goes off the ground it will fuel demand for surface tippers (used in transportation of bricks, stone, gravel, sand, etc), he said.

The government's capex in infrastructure will boost consumption and in turn aid demand for other cargo vehicles.