Expect CV industry to grow in double digits this fiscal: Tata Motors ED

Tata Motors expects the commercial vehicle industry sales growth to be in double digits this year despite hike in interest rates on auto loans, according to a senior company official.

Favourable factors such as government's investment in infrastructure, gradually increasing consumption in the country and robust growth in end-use sectors like e-commerce outweigh headwinds such as high inflation and increased interest rates, Tata Motors Executive Director Girish Wagh told PTI.

"The actual demand is going to be a net factor of the headwinds and tailwinds, within which the inflation, interest rates remain kind of headwinds," he said.

On the tailwind side, Wagh said the government's investment in infrastructure and number of projects, the gradually increasing consumption in the country as also the end-use sectors such as e-commerce are showing robust growth.

Also, he said the rising freight rates and fleet utilisation are continuously increasing the transporter confidence index.

"It does appear that the tailwinds and headwinds together should lead to good double-digit growth in the industry this year. We should expect a double-digit growth in the CV industry during this year," he said.

According to Society of Indian Automobile Manufacturers (SIAM), in the first quarter of 2022-23, domestic CV sales grew 112 per cent at 2,24,512 units as against 1,05,800 units in the year-ago period.

In 2021-22 it grew by 26 per cent at 7,16,566 units as compared to 5,68,559 units in 2020-21.

When asked how much impact the increase in interest rates on vehicle loans has had on demand, Wagh said, "Interest rates do have a fair bit of impact on the EMIs of a vehicle... Of late with the interest rates increasing no doubt, the EMIs will go up."

However, he said the industry has worked with financial institutions to provide such financing solutions that there is not much increase in the EMIs.

"When we moved from BS IV to VI, and also later on due to (vehicle) price increases as a result of the commodity price increase, it was leading to an increase in EMI of the vehicle but we worked with financial institutions. They've come up with schemes which showed that the EMI still remained similar to what it was in the pre BS-VI era, more or less," Wagh said.

In August, the Reserve Bank of India (RBI) had raised the key interest rate by 50 basis points. This was the third consecutive increase since May, effectively bringing interest rate to the pre-pandemic level.

Asked about the outlook for Tata Motors, he said the company's focus would remain on profitable growth, although it sees demand picking up in the second half of the fiscal.

"We've just gone through the rainy season and now the festive season will start. So the demand will start picking up like it happens every year from the second half of August and September. That's what we are expecting. In fact, last year also from September the demand picked up pretty well," he added.