CV makers post strong sales in Feb on as mfg and infra activities pick up

MHCV segment has been improving on strong tipper & ICV pick-up; buses continues to be in red

Domestic commercial vehicle (CV) sales in February grew in line with a pick-up in manufacturing and infrastructure activities. While the truck segment reported positive growth, the bus segment continues to be in red.

Tata Motors CV domestic sales rose by 22 per cent this February to 31,248 units from 25,572 units a year ago. Month-on-month, the growth was around two per cent, led by Medium and Heavy commercial vehicles (M&HCV), which grew 30 per cent year-on-year and I&LCV (68 per cent). However, passenger carriers reported a 63 per cent drop.

A Tata Motors Spokesperson said CV sales have picked up and are growing quarter on quarter. The firm, whose CV Sales grew by 82 per cent in Q3FY21 over Q2FY21, expects the growth to continue in Q4 as well.

He added that the M&HCV tipper trucks segment has displayed a rebound due to a gradual rise in economic activity. The resumption of construction-based activities, as well as announcements of new projects in the post lockdown period, have been major catalysts for the rise in the demand for the tipper trucks in the last six months.

The announcement of multiple infrastructure projects including highways, bridges and tunnels, port connectivity as well as mining-specific activities such as irrigation, water resources, coal and iron ore announced by central and various state governments have given a major impetus to the segment growth.

The growth in the cargo segment has been attributed to demand growth of steel, POL (petroleum, oil and lubricants), passenger cars and the pharma industries. The Small Commercial Vehicle, Pick-up and Intermediate and Light Commercial Vehicle segment too have displayed an extraordinary revival due to robust growth in the rural economy and an upsurge in the e-commerce sector.

Ashok Leyland’s M&HCV trucks sales were up 44 per cent to 6,790 units in February 2021 from 4,706 units a year ago, while bus sales dipped 84 per cent to 324 units from 2,039. Total M&HCV sales rose by 5 per cent to 7,114 units from 6,745 in the year ago period. Company's LCV sales rose by 46 per cent to 5,662 units from 3,867 units, a year ago.

Anuj Kathuria, COO, Ashok Leyland earlier said that month on month sales are increasing, January was not upto the expectations, not because there is no demand it was due to supply chain issues. While the long haul segment demand yet to reach the pre-covid levels, ICV, tippers have seen a good recovery and the trend is expected to continue. The long haul segment is also expected to rebound in the next few months considering the Government push in infrastructure picked up. The Bus segment reached only 10-15 per cent of the usual yearly sales .

ICV demand has gone above last year, tipper reached almost last year levels.

VE Commercial Vehicles said in the domestic CV market, Eicher branded trucks & buses have recorded sales of 4,825 units in February 2021 (YTD 29109 units) as compared to 3875 units in February 2020 (LYTD 41631), representing a growth of 24.5 per cent (YTD decline of 30.1 per cent).

Sachin Pillai , Managing Director & Chief Executive Officer, Hinduja Leyland Finance, one of the leading lenders, said demand started picking up in the later part of Q2 from September onwards.

"Last quarter we saw our disbursement move to 65 per cent of the Pre-Covid levels. The traction continues in the quarter as well – continuance of the same we believe we should be at Pre-Covid levels of disbursement by the start of next Fiscal," Pillai said.

On a YTD basis, the de-growth is obviously still significant, however HLF has seen a good bounce back in terms of confidence on the ground September onwards. "The gap is narrowing and with the continuance of the same trend we might see pre-Covid disbursements back in Q1 of next financial year. In M&HCV, sequential growth is led by LCVs, ICVs, Tipper initially and now we see a gradual growth in the haulage segment as well," said Pillai.

Umesh Revankar, MD and CEO, Shriram Transport Finance added new financing for M&HCV has picked up month on month in the backdrop of the economy opening up and the Government's decision to accelerate infrastructure projects. Financing for LCV has come to last year level considering LCV sales are growing faster compared to other segments.

As far as financing for used vehicles, which STFC specialise, Revankar said across all segments the lending has reached pre-covid levels in the CV space thanks to infrastructure projects coming back on track, rural economy continues to be good, e-commerce among other factors.

"I expect the demand for commercial vehicles to go up considerably because government spending has gone up, which also drives infrastructure and real estate activity, and that will also push the construction sector as some concession given on stamp duty will increase activity and demand. So, Q4 should be good,"said Revankar.