CV firms build inventory to meet likely demand surge this quarter

Anticipating a surge in demand ahead of the implementation of BS-IV emission norms from April 1, commercial vehicle (CV) makers are building inventory. After a tough December quarter, they expect a better March quarter.

According to industry sources, 30,000 to 40,000 units have been kept as inventory to meet the demand. With the new norms, a price rise of close to 10 per cent is expected on vehicles, beside the servicing issues for newer technology ones.

E-mails in this regard sent to Ashok Leyland, Mahindra and Mahindra and Tata Motors weren't answered. However, Leyland's management in a recent analyst call said it expected this demand rise before the new norms and was preparing. An analyst who was part of the call recalled the management had indicated a preparatory inventory of around 11,000 vehicles.

Kamal Bali, managing director, Volvo India, said after a temporary fall due to the effects of demonetisation for two months, both the light & medium and heavy duty segments of the CV industry were expected to stage a strong recovery in the March quarter. This is traditionally a strong quarter for the CV industry for various reasons, including the benefits of depreciation before the next financial year begins.