The demand for trucks and buses looks to be on the growth path again. Market leader Tata Motors has raised production over recent weeks, while Chennai-based Ashok Leyland says the worst is over for the commercial vehicle industry.
P M Telang, executive director, Tata Motors, said: “The demand for Commercial Vehicles (CVs) has gone up in recent weeks across the country. There was a major inventory correction in earlier months through cuts in production, but demand has recently picked up very well. We are currently facing a supply constraint, with demand exceeding supply.”
Experts said the spurt in demand for CVs was triggered by the government’s steps when it announced the second stimulus package in the first week of January. The package eased liquidity to some extent.
A special line of credit was made available to Non-Banking Finance Companies (NBFC) with the help of some state-run banks. Additionally, an accelerated depreciation benefit of 50 per cent was provided for CVs purchased in the current quarter.
Ashok Leyland, the largest CV maker after Tata, is expecting growth in the current quarter to be better than the earlier two, although flat when compared to the same period last year.
Ashok Leyland Chief Financial Officer K Shridharan said: “There will be no dip in sales in the current quarter, as demand has shown an upswing. The quarter will, however, be subdued when compared to the corresponding one the previous year. We believe the worst is over for the industry.”
According to Tata Motors, its sales of trucks, buses and light commercial vehicles grew 35 per cent in February, at 23,454 units, against 17,373 units sold in January. However, when compared to last year in the same month, sales have declined 25 per cent, from 31,317 units.
The company’s sale of medium and heavy commercial vehicles in February, at 8,810 units, was a jump of 52 per cent over January, which had seen much the same trend as in the final three months of last year.
Mumbai-based Mahindra & Mahindra saw a jump in demand for commercial three-wheelers in February. At 3,415 units, it was 45.5 per cent more than the 2,347 units sold in the corresponding month a year ago. The trend was similar for other light CVs.
Component vendors supplying to CV manufacturers have also reported a surge in volumes in the past month. M Radhakrishnan, joint managing director of Pune-based Autoline Industries, a major supplier of sheet metal components and sub-assemblies said: “There was a sharp rise in the sourcing of components from CV players, especially Tata Motors. We anticipate March to be at the same pace.”
