New Delhi: Auto maker Tata Motors Ltd expects the pace of growth in truck and bus exports to decline in the year to 31 March after demand contracted in developed countries in the wake of a financial crisis and an economic slowdown.
India’s largest maker of trucks and buses expects the share of such exports to be only 8-9% of its revenue from the commercial vehicle segment in 2009-10, according to Ravi Pisharody, president of Tata Motors’ commercial vehicle business unit.
Before the financial crisis that started in September 2008, exports of commercial vehicles used to contribute around 11% of the company’s revenue from the segment.
Bullish: Tata Motors commercial vehicles unit president Pisharody. Ashesh Shah / Mint
“Though the economy has recovered significantly in the last six months, exports have been relatively slower to pick up,” he said at a press conference at the Delhi Auto Expo. “In the first half of the current fiscal, we had negative export growth, but we have managed to arrest that trend and are expecting exports to pick up in the next fiscal (2010-11).”
For fiscal year 2008-09, Tata Motors posted net revenue of Rs70,938 crore and a net loss of Rs2,505 crore.
Pisharody said that in the current fiscal, the commercial vehicles division had to defer some of its capital expenditure plans because of the slowdown. “Now that the economy is reviving, we have to see how we can go forward with our investment plans in the next fiscal.”
Tata Motors has increased the prices of some of its medium and heavy commercial vehicles by around 1% from January. Pisharody said the prices of inputs have risen, and after a certain increase, had to be passed on to consumers.
The company, however, remains bullish on local sales of commercial vehicles.
“The last nine months have been very robust in terms of domestic sales, and we foresee this trend to continue for the next year at least,” Pisharody said. There maybe a temporary slump in demand when the government looks to withdraw the financial stimulus provided to the economy, he said.
Tata Motors sold 33,519 commercial vehicles in December, the highest since March 2008 and more than double the number sold in December 2008, according to data available on its website. Sales of commercial vehicles from April to December reached 255,168 units, up 31% over the year-ago period.
Pankaj Chadha, director, automotive, at consultancy firm Ernst and Young India, said that since buying countries were the worst-affected by the downturn, auto exports from India had taken a hit.
“It (the slump in commercial vehicle exports) is not a matter of great concern,” Chadha said. “India’s story is one of domestic demand.”