CV growth on track but diesel could play spoilsport

by Nilesh Wadhwa 02 Apr 2022

The commercial vehicle segment, often considered the barometer of a country’s economic health, is finally seeing some positive momentum. For FY2022, the overall wholesales numbers came at 664,009 units, which is 26 percent higher than 526,073 units sold in FY2021. While on the hand, there are definitive signs of revival in growth, the impact of the rise in diesel prices needs to be monitored closely.

 In March, the overall CV sales came in at 90,747 vehicles, which is a healthy 20 percent growth compared to last March and 57 percent higher than February 2022. Interestingly, the M&HCV segment saw an average growth of 45 percent for the fiscal.

 For Tata Motors the country’s largest commercial vehicle manufacturer, the overall sales for FY2022 came in at 322,182 units, up 33 percent on the back of increased road construction, mining and improved infrastructure spending by the Central and State governments. The growth was led by the SCV Cargo and pickup segment along with the M&HCV segment, which increased of 70 percent and 50 percent respectively. The Q4 FY2022 sales were up 21 percent at 110,027 sequentially and gained 12 percent on a year-on-year basis.

 Girish Wagh, executive director, Tata Motors said, “Early signs of recovery were seen in otherwise worst impacted CV passenger segment. The International business continued the momentum and grew by around 3 percent over the previous quarter (Q3FY2022) while being 16 percent above the same quarter last year (Q4 FY2021). We are cautiously optimistic about domestic MHCV and ILCV demand while keeping a close watch on geopolitical developments, fuel inflation and semiconductor shortage.”

 Ashok Leyland too saw its wholesales grow by 27 percent in FY 2022, with sales of 117,312 units compared to 92,714 units for the same period last year. But in terms of monthly sales, for March while the wholesales grew by 18 percent YoY, the M&HCV Bus segment and LCV segment were in red.

Mahindra & Mahindra, which has been one of the most impacted due to the ongoing semiconductor shortage, too clocked double-digit growth, up 17 percent with sales of 177,117 units for the year. The growth was led by LCVs ranging between 2T to 3.5T segment.

For VECV, the company reported wholesale of 47,398 units for FY2022, compared to 35,163 units sold last fiscal. For March, the sales came in at 7,929 units, 31 percent higher compared to the same period last year.

Growth outlook
While the overall sales for FY2022 was better than the last financial year, the global geopolitical situation, especially the Russia-Ukraine conflict, semiconductor shortage, increase in raw materials cost and other factors are expected to influence the sales momentum significantly, going forward. With diesel accounting for close to 45 percent of running costs, that’s also a key monitorable in the new financial year.

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