CV sales plunge by 41% in August, Tata Motors and Ashok Leyland see a new low 

With M&HCV sales most impacted, market leaders Tata Motors and Ashok see their M&HCV numbers plunge by 58% and 70% respectively.

By Kiran Bajad calendar 03 Sep 2019 Views icon38178 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

The commercial vehicle sector, like the passenger vehicle industry, continues to be badly hit by the ongoing downturn. As per the initial numbers released by CV OEMs, it looks like the consolidated numbers in August 2019 will see a new low.    

Sales of medium and heavy commercial vehicles (M&HCV) have been the most impacted. Tata Motors and Ashok Leyland, the two largest players in the segment, have seen their M&HCV sales plunge by 58 and 70 percent respectively.

The overall slowdown in the economy means has there are fewer consignments and loads to be transported across the country, in turn reducing freight rates. This, along with the poor liquidity issue due to which  financing of trucks is tightening due to truck owners defaulting on their EMIs, has dampened new vehicle buying by both large and small fleet operators. The turnaround of the truck sector will now solely depend on how long the economy takes to revive.

According to Girish Wagh, president, Commercial Vehicles Business Unit, Tata Motors, "The subdued demand sentiment due to poor freight availability, lower freight rates and a general slowdown in the economy continue to hamper commercial vehicle demand. System stock reduction through retail focus and aligning production will continue to be our approach, while cautiously monitoring the market, in these challenging times. As a result, retail sales are estimated to be ahead of wholesales by over 25 percent in August. We are looking forward to a positive impact of the recently announced stimulus package by the Government."

If there is some hope on the horizon, then it will be the beginning of pre-buying of trucks ahead of BS VI emission norms that are mandated from April 2020. It is expected that partial pre-buying will start from September and go right up to January 2020. However, given the considerable negative market and consumer sentiment in the economy, the fall in GDP growth and the ongoing production cuts at OEMs, it is difficult to estimate how much really will pre-buying of M&HCVs really uplift overall numbers, giving the extent of the red ink on OEM sales.

How the OEMs fared in August
Commercial vehicle market leader Tata Motors, which in the April-July 2019 period had a market share of 42.28 percent, sold a total of 21,824 units in August 2019, which marks a sharp year-on-year decline of 45 percent. Its M&HCV sales plunged by 58 percent to 5,340 units (August 2018: 12,715). And intermediate LCV numbers dropped by 40 percent to 3,152 units. Sale of its cargo SCVs and pickups were down 36 percent to 11,082 units, and that of its commercial passenger carriers (buses) dropped 50 percent to 2,250 units.

Ashok Leyland, which has a market share of 25.48 percent, registered a 50 percent drop in its overall domestic sales in the month to 8,296 units. (August 2018: 16,628). Its M&HCV sales slumped 63 percent to 4,585 units;  trucks are down 70 percent while bus sales fell marginally by 3 percent. LCVs were down by 12 percent to 3,711 units (August 2018: 4,208).

Mahindra & Mahindra’s overall CV sales were down by 28 percent to 14,684 units (August 2018: 20,362). Its M&HCV sales tanked 69 percent to 354 units. The below-3.5T GVW segment sold 13,855 units, down 28 percent (August 2018:18,584), and those in the above-3.5T GVW segment declined by 20 percent to 475 units.

VE Commercial Vehicles’ sales fell by 35.1 percent last month; the company sold 3,144 units in the domestic market (August 2018: 4,843 units).

SIAM urges GST cut to 18%, scrappage policy
Given the sharp sales decline, apex industry body SIAM has once again reiterated the need for a GSt reduction from the existing 28 percent to 18 percent. According to Rajan Wadhera, president, SIAM, “The sales reports of various companies for the month of August 2019 have been very dismal with over 30 percent erosion of sales for passenger vehicles. The commercial vehicle and two-wheeler sales are also significantly negative, indicating that the market has still not responded to the various measures initiated by the Finance Minister last month. The series of announcements on credit availability and reducing the cost of credit that were made do not seem to have percolated down to the NBFCs which support the bulk of finance for the automotive industry. The consumer sentiment also continues to be low and there is clearly a trust deficit in lending money to the dealers. 

On its part, the automobile industry has pulled out all stops in offering attractive deals and discounts to the consumers. However, the ability of the industry to provide large discounts is limited and this only highlights the need for the government to consider reducing the GST rates from 28 percent to 18 percent, which would significantly reduce the cost of vehicles and in turn create demand.

There is also an urgent need to come out with an integrated incentive-based vehicle scrappage policy covering all segments of the auto industry The festival season has begun, it is imperative that these decisions are taken quickly to facilitate a recovery in the industry,” emphasised Wadhera.


Maruti Suzuki’s Nexa records 2 million sales, Baleno commands 62% share

auther Autocar Pro News Desk calendar25 Mar 2023

Premium retail channel strategy which targets young India with high-on-value products and a dynamic showroom experience ...

Maruti Suzuki sells more UVs than Tata Motors in February, leads the race in FY2023

auther Autocar Pro News Desk calendar11 Mar 2023

With sales of 33,550 utility vehicles, Maruti Suzuki goes ahead of Tata Motors (28,389 units) in February; this performa...

Mahindra Tractors farms growth in February, sells record 370,000 units in ongoing fiscal

auther Autocar Pro News Desk calendar07 Mar 2023

Sales of 24,619 tractors in February rise 30%; domestic market sales of 355,909 units in FY2023’ first 11 months a new h...