Margin pressures to stay high for truck makers

Aggressive discounting making it difficult to raise prices

Since volumes have risen for medium and heavy commercial vehicle (M&HCV) players, one would think these are good days for them. However, that is not the case.
 
While volume gains are positive, a sharp rise in raw material prices and aggressive discounts being offered on commercial vehicles, margin pressures on these players are expected to be elevated. Some of the pressure was visible in the September quarter (Q2) results, with Ashok Leyland reporting a 150-basis point year-on-year (y-o-y) fall in operating profit margins to 10.1 per cent on the back of heavy discounts, raw material prices, and aggressive pricing