Home / Companies / News /  Amid Covid-19 crisis, commercial vehicle sales crash 89% in March

Mumbai: The commercial vehicle (CV) segment, a major indicator of economic activities, has crashed 89% year-on-year in March as India comes to a screeching halt to deal with Covid-19 crisis. The segment took a deeper cut when compared to the passenger vehicles, which were down 52% in March.

Sales reported by the leading CV manufacturers, including Tata Motors Ltd, Ashok Leyland Ltd, Mahindra & Mahindra Ltd (M&M), Volvo Eicher Commercial Vehicles Ltd (VECV) and Maruti Suzuki India Ltd (MSIL) added up to 11,683 units in March, which has declined 89% on an annual basis. The five CV companies had together sold 107,119 units in March 2019.

The segment leader Tata Motors Ltd (TML) on Wednesday reported domestic sales of 5,336 units in March, down 89.52% from 50,917 units during the year-ago period. CV exports stood at 1,787 units for the last month as against 5,619 units, the company said on 1 April.

“Domestic sales in March were deeply impacted by the Covid-19 lockdown as well as the planned transition to BS-VI," said Girish Wagh, president, CV business unit at Tata Motors.

Wagh said that retail sales, however, were significantly higher than the wholesales (or factory dispatches to the dealership channels).

“Almost all BS-IV vehicles in the ecosystem have been retailed, however some await registration which was halted due to the lockdown. This will be cleared in the window provided," Wagh said adding that the production plan of BS-VI vehicles was on track until the lockdown was announced.

According to the Federation of Automobile Dealers Association, India (Fada), there were about 12,000 BS-IV compliant commercial vehicles that were left unsold due to the pan-India lockdown. The Supreme Court, in its order on March 27, has allowed the industry to sell only 10% of the total unsold BS-IV stock within 10 days once the 21-day lockdown is lifted.

How the vehicle manufacturers and their dealer partners would manage the remaining 90% of the unsold BS-IV inventory is yet to be seen.

Meanwhile, country’s second largest medium and heavy commercial vehicle manufacturer (MHCV) Ashok Leyland said at 1,787 units, its domestic CV sales fell 91% YoY in March. It’s total domestic CV sales in March 2019 were 20,521 units.

The commercial vehicle segment, which was already struggling with reduced cargo movement amid slowdown and new rules passed under the axle load norms in 2018, is vulnerable to the economic shocks, said Shamsher Dewan, vice president, corporate sector ratings, Icra Ltd.

“Until February, there was no pre-buying. The companies had good inventory in the dealership channels. So they did not produce much and this is the reason behind the sharp drop in the CV wholesale volumes in March. In March, the focus was to liquidate BS IV inventory. However, nobody anticipated the covid-19 crisis and the subsequent lockdown," Dewan added.

To deal with the ongoing crisis, both the leading CV players have stepped up support to their customers by taking a slew of measures, including extending the vehicle warranty timelines.

For example, Ashok Leyland, on April 1, announced that it has extended the warranty period by two months for all MHCV models and by 45 days for all light commercial vehicle or LCV models.

The company said it also created a joint task force team that reached out the truck owners stranded on the highways across the country amidst lockdown to lend support. “In a span of four days, over 1,300 drivers were supported," it said in a note on Wednesday.

“Our focus is to secure the extensive business continuity plan including ensuring full support to all our customers in need, particularly those who are transporting the essential goods during this challenging period," Wagh of Tata Motors said.

Meanwhile, M&M reported its domestic CV volumes for March at 2,325 units, down over 90% y-o-y. VECV posted sales of 1,499 units for last month, recording a sharp drop of 83% y-o-y.

“The macro economic environment is bad and the fleet operators are struggling to pay their debts. So there is no question of buying new trucks. Furthermore, the demand for consumables has declined too, this will impact the demand for light and intermediate commercial vehicles (LCVs and ICVs)," Dewan said.

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