Heavy trucks begin to pull out of slow lane2 min read . Updated: 04 Dec 2020, 08:42 AM IST
- Uptick in economic activities have fuelled the demand for such vehicles
Demand for medium and heavy commercial vehicles (MHCV), particularly heavy trucks weighing 16 tonnes or more, has started picking up, three senior industry executives told Mint, thanks to greater manufacturing, freight transport, and government investments in infrastructure.
The MHCV segment was the worst hit among all vehicle categories, with demand spiraling down following the Infrastructure Leasing and Financial Services (IL&FS) liquidity crisis nearly two years ago. While the MHCV segment posted a 42% decline in volumes last fiscal year—the steepest year-on-year fall in at least a decade—volumes fell 76% in H1FY21 following the pandemic-induced crisis.
However, India’s top two commercial vehicle (CV) manufacturers—Tata Motors Ltd and Ashok Leyland Ltd—are witnessing significant recovery in demand for heavy trucks over the past two months.
In October, Tata Motors and Ashok Leyland saw year-on-year growth of 3% and 13%, respectively, to 5,033 units and 3,762 units, for MHCV trucks. Last month, Tata Motors sold 5,699 units, to record 13% sequential growth, while Ashok Leyland registered sales of 4,238 units, up 23% year-on-year.
While both companies are seeing green shoots of recovery in the MHCV segment, also seen as a key indicator of economic activity, on increased freight and commissioning of new infrastructure projects, Emkay Global Financial Services Ltd said this recovery could transform into a cyclical rally involving 24% growth in the March quarter of FY21, and about 66% growth in FY22 riding on replacement demand and higher industrial output.
“The recommencement of construction activities post the nationwide lockdown and subsequent announcements of major projects by the central and state governments have fuelled the demand for MHCV tipper trucks," R.T. Wasan, vice president, product line, MHCV, Tata Motors, said.
The tipper truck segment was among the first to show signs of demand recovery in the post-lockdown period, he added. Led by a pick-up in construction and manufacturing activities over the past few months, industry executives are also seeing recovery in cement and steel production, which is adding to the demand for heavy trucks.
“The announcement of new construction activities like highways, bridges and tunnels, port connectivity and irrigation as well as mining-specific sectors such as coal and iron ore were imperative in the steady rise of the MHCV tipper segment," Wasan said.
“E-commerce, fast moving consumer goods and durables, pharma, petroleum, oil and lubricants have contributed to the recovery while the surge in demand for passenger vehicles has boosted the demand of car carriers," he added.
Gopal Mahadevan, chief financial officer, Ashok Leyland recently said in an interview that the demand for MHCV trucks is expected to rebound on the back of economic recovery during H2FY2021.