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| Demand for heavy trucks fuels optimism in manufacturers |
| Swaraj Baggonkar / Mumbai Oct 14, 2009, 00:05 IST |
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Improved liquidity within the system, coupled with strong impetus given to a variety of infrastructural projects by the public and private sectors, have given heavy truck manufacturers the optimism to revise their growth projections to high double-digits for the remaining part of the year.
The medium and heavy (M&HCV) truck segment posted growth in sales for the second month in a row in September, clocking 17,401 units against 16,971 units in the same month a year earlier, according to the Society of Indian Automobile Manufacturers (Siam), the apex representative body.
K Sridharan, chief financial officer, Ashok Leyland, said: “We are running our plant to full capacity, where we are scaling up production to 8,000 units a month to meet the increased demand. There is a phenomenal growth registered in multi-axle and tractor vehicles. The only one where there is no growth is the tipper segment.”
Chennai-based Leyland, the second biggest truck maker, recorded a drop of 4 per cent in sales last month in the M&HCV segment, at 3,371 units as compared to 3,518 units sold in the corresponding month a year earlier. But, the company is pleased with the sequential monthly growth of 17 per cent over August.
"The double-digit growth in the latest IIP (Index of Industrial Production) data has a direct correlation to sales of large trucks since an increase in industrial activity results in a pick-up in their sales. Going forward, we expect the large goods carrier segment to post positive sales on the back of a low base last year,” R Seshasayee, managing director, Ashok Leyland, said.
He added that new emission norms, which would be enforced in April 2010, would further aid truck sales in the first quarter of calendar year 2010. “The new emission norms for next year will result in the old inventory being cleared, resulting in increased CV sales,” he pointed out.
Positive sentiment and availability of easy finance due to stimulus packages announced by the Centre, which has made banks lend to non-banking finance companies, are some reasons for the demand resurgence. So are positive moves by the Union surface transport ministry to meet the shortage of funds for highway builders and other programmes such as the golden quadrilateral project, say industry watchers.
Somnath Banerjee, executive V-P (sales, marketing and after market), VE Commercial Vehicles, said: “The issues of availability of funds to buy commercial vehicles and at the right lending rates have eased by a large extent. Demand is looking brighter but interest rates should not move northwards in the coming months.”
VE Commercial Vehicles is a unit of Delhi-based Eicher Motors and the Swedish auto giant, Volvo. It witnessed its sales grow two-fold during September to 169 units as against 79 units sold in the same month a year before.
Meanwhile, medium and heavy truck sales of Mumbai-based Tata Motors, India's largest maker of commercial vehicles, was flat for September at 11,357 units as against 11,360 units. However, it was higher by 22.75 per cent when compared to August, where it clocked 9,252 units.
A senior executive from Tata Motors stated, “After months of negative growth, the heavy commercial vehicle segment has shown some positive growth, month-on-month. These are not just green shoots but there has been a proper revival in demand and we expect to log double-digit growth in the next six months.”
Analysts say the positive movement in demand for CVs is evident from the surge seen in their respective stock prices. The average share price of all the three listed companies — Tata Motors, Ashok Leyland and Eicher Motors — has risen by an average of more than 150 per cent since the start of the financial year, with Tata Motors leading the charts with a growth of 206 per cent.
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