Mumbai: India’s largest commercial vehicle maker, Tata Motors Ltd, is aiming to top its record February sales of 39,205 trucks and buses this month, a top executive said.
Commercial vehicle sales are normally buoyant in March, said R. Ramakrishnan, vice-president, sales and marketing, commercial vehicles, Tata Motors, which sells two of every three commercial vehicles in India.
This year, March sales have been boosted further by the prospect of new emission regulations being imposed from April—which has advanced purchasing decisions—as well as the good performance of export-import, mining and infrastructure sectors, he said.
Graphic: Paras Jain / Mint
All new vehicles registered in 13 cities from April will have to meet Euro IV emmission norms, while the rest of the country will switch to Euro III, according to the new regulations. As the shift will also likely raise vehicle prices, operators of commercial vehicles have advanced purchases to March, analysts say.
“We are working towards tapping into it,” Ramakrishnan said.
Manufacturers did not share production figures for the current month. But three suppliers told Mint that Tata Motors was planning to produce more than 45,000 commercial vehicles in March, up from 29,479 trucks and buses in the corresponding month a year ago.
“The bouyancy in March sales is a function of a strong underlying demand, seasonal factors (such as the fiscal year-end on 31 March) and implementation of the new emission norms,” said Manoj Mohta, head of research at Crisil Ltd.
The sales of trucks, a key barometer of economic performance, declined by almost two-thirds after October 2008 as the global economy slowed. But they regained momentum in the second half of 2009 thanks to the economic recovery, and sales are now accelerating.
Ramakrishnan said Tata Motors will hike prices in April; analysts expect the increase to be between 3% and 5%. Ramakrishnan said rising prices in April will slow sales, and they will bounce back only in September, after the monsoon, which is associated with sluggish demand.
Besides Tata Motors, other commercial vehicle makers such as Ashok Leyland Ltd and VolvoEicher Commercial Vehicles Ltd are also betting on the last month of the fiscal to make up numbers. According to a supplier, Ashok Leyland plans to make around 9,000 trucks and buses in March against its monthly average of 6,000.
K. Sridharan, chief financial officer at Ashok Leyland, however, is betting on a postponement in the implementation of Euro III norms to October, expecting a surge in demand due to this factor to kick in only around July or August. Sridharan said it was the implementation of Euro III in most parts of the country, rather than Euro IV in 13 cities, that was crucial for commercial vehicle makers.