Commercial Vehicles on the Uptick growth in July’2017

After reasonably tough Q1 (April-June 2017) when overall sales at 151,837 units were down 9.08 % year on year (YoY), the commercial vehicle (CV) sector has recorded a sharp recovery in July driven by an uptick in the critical medium and heavy commercial vehicle (M&HCV) segment.

With GST rollout that came in July’2017, all major CV manufacturers have registered higher growth across both the M&HCV and LCV segments. Market leader Tata Motors, which has seen a correction in its sales over the past three months, has returned to growth territory with overall sales up by 15 % in July. Similarly, Ashok Leyland, the second largest CV player, which also saw sales fall in the first two months of FY2018, posted double-digit growth in July.

The strong comeback in the M&HCV segment reflects the comeback of their demand in the industry. This growth also turned out to be motivators for fleet operators to start looking at expanding their fleets.

Through increased thrust on infrastructure and rural sectors in the recent Budget, potential implementation of fleet modernization or Scrappage program and higher demand from consumption-driven sectors, especially for LCVs and intermediate commercial vehicles (ICVs), commercial vehicles will find their momentum back.

In addition, the National Green Tribunal’s (NGT) thrust on phasing out old diesel vehicles along with the government’s proposed vehicle modernization program would trigger replacement-led demand. Apart from those regulatory developments, resumption of mining activities in select states would also continue to support demand for tippers.

On the monthly sales front, Tata Motors’ overall CV sales rose 15 % in July at 27,842 units (July 2016: 24,242) backed by the ramp-up of BS IV production, across segments.

While demand for its M&HCVs was up 10 % in July 2017 at 8,640 units (July 2016: 7,879), the I&LCV truck segment grew by 28 % at 3,354 units (July 2016: 2,626 units).

Since ratio of used commercial vehicles to that of the new commercial vehicles is 1:1. Used commercial vehicle segment is witnessing a robust demand as well. Shriram Automall India Limited (SAMIL) the №1 Used Vehicle and Equipment Provider in India, through its extensive line up is the leading service provider.

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