Mumbai: Mahindra & Mahindra’s (M&M) commercial vehicle subsidiary, Mahindra Truck and Bus Division, expects heavy commercial vehicles (HCVs) to register around 30% year-on-year decline in sales during FY2020 on increased load capacity from new axle load norms, low freight volumes and overall slowdown in economic activities.
Vinod K Sahay, chief executive officer, Mahindra Truck and Bus Division (MTB), talking to reporters on 14 October, had said, “The HCV industry has declined by over 50% so far this fiscal. I think this industry will end this year at not less than 30-35% YoY. There is no way that the industry can come back to normal this year."
Earlier, Satyakam Arya, managing director and chief executive officer at Daimler India Commercial Vehicle Pvt Ltd (DICV) had told Mint that he expects the medium and heavy commercial vehicle (MHCV) segment to register a YoY decline of 25-30% this fiscal and 10-15% decline in FY2021 on introduction of BSVI emission norms. “MHCVs will return to growth only in 2021 and not before that," he had told this publication recently.
However, Sahay anticipates that the market for heavy trucks has bottomed out and will begin to recover in another two to three quarters.
“Many large contractors were in a very bad shape because their outstanding (payment) had gone beyond 120 days and they were staring at a severe working capital crisis. So now for sure the release of payments has started. However, the pace (of release of payments) is slow this year. So this phase has to be cleared first and the impact on demand for HCVs will follow," he said.
“HCV industry is not driven on consumer sentiments. Right now, we are not seeing orders."
Sahay was referring to the contractors engaged with the government’s infrastructure projects such as construction of roads, bridges, ports and others. Contractors are key customers of heavy trucks (particularly tipper trucks) and construction equipment.
Talking about large fleet operators, who carry freight cross-country, Sahay said that the extent of pre-buying of BSIV trucks would be much lower than what was anticipated earlier. “Large fleet operators with 200-300 trucks may look at pre-buying a few units to replace their ageing vehicles. That said, the sentiment for pre-buy of BSIV trucks is not big anymore," he apprised.
“Commercial vehicle demand will revive only when the economy revives," he said.
The company said it plans to commence retail sales of BSVI compliant trucks only from April next year.