CV sales pick up pace in Feb on improved macro economic factors

Cumulative CV sales at top-four players up 25% YoY to 72,434 units

Commercial vehicles (CV) dispatches at most firms rose sharply in February as an improvement in fleet utilization levels improved operators’ profitability prompting them to purchase new vehicles.

Cumulative CV sales at the top four CV makers including Tata Motors, Ashok Leyland,  Volvo Eicher Commercial Vehicles (VECV) that report their monthly sales, rose 25 per cent year-on-year to 72,434 units.

A pick-up in construction, mining, and real estate activities, coupled with the improved freight availability, also helped. Additionally, the last year’s low base also propped up dispatches.  Auto firms in India count dealer dispatches as sales.

The overall CV sales were led by an accelerated growth in medium and heavy commercial vehicles (M&HCV) at the firms. Sales at Tata Motors for instance, increased to 33894 units during the month from 31248 units last year.  It was led by an 18 per cent y-o-y growth in the M&HCVs. Sales of such vehicles at the CV market leader went up to 10,233 units from 8664 units in the corresponding period last year.

“We are in a sweet spot. The CV sales have been down for the last three years. We are hoping to reach the FY20 levels, a year when sales went down 40 per cent YoY,” said Vinod Aggarwal, managing director and CEO at VECV.  

Growth in eight-industry, core sector output dipped to 3.7 per cent in January against 4.1 per cent in the previous month, showing a mild effect of Omicron-induced region-specific lockdowns, showed the government data released on Tuesday.

The core sector has a bit over 40 per cent weighting in the IIP. This means the industrial sector may have escaped any major impact of the third Covid wave, which was milder than the previous two.

On the impact of the geopolitical tension and an impending price hike in petrol and diesel, Aggarwal said, if the economic recovery continues and transporters are able to pass on the fuel price and increase freight rates, the CV market will be able to retain the current momentum. Otherwise, the recovery can get derailed. “We have to wait and watch,” he said.

The improved freight availability bumped up the freight rates by 1.5 to 2 per cent on key trunk routes in February even as the diesel prices remained unchanged, Indian Foundation of Transport Research & Training (IFTRT)

Cargo offerings from the factory gate, general merchandise, electronic, consumer durable was brisk resulting in a stabilization of fleet utilisation to 80-85 per cent at 75 key trunk routes across the country, said IFTRT.