ReutersNEW DELHI/MUMBAI: The country’s second-largest commercial vehicle maker Ashok Leyland said that sales were improving month-over-month, however, they were far from the pre-Covid-19 levels and the industry is likely to take 2-3 years to recover to the peak sales of FY19.
The company said that the sales of light and intermediate commercial vehicles (LCV and ICV) have shown quicker improvement due to rising demand from segments like e-commerce and agricultural perishable products. For medium and heavy trucks, demand recovery is slower with some demand trickling in from road construction and mining activities.
“Every month demand is improving. The Medium & Heavy Commercial Vehicle (MHCV) segment saw peak sales of 400,000 units in FY19. We have to wait and see if we recover those levels next year or the year after that. The recovery is faster in Intermediate Commercial Vehicles,” said Anuj Kathuria, chief operating officer, Ashok Leyland.
Kathuria said e-commerce as an activity has taken off in the last few months and is providing growth opportunities for commercial vehicle makers. Demand has also recovered well for two-wheelers, mass segment passenger cars, auto parts and FMCG products, which has resulted in an increase in demand for inbound and outbound logistics.
The company on Thursday launched an additional trim of intermediate trucks to better address the ICV market. “Our market share in ICV segment is 20% and in overall M&HCV segment is upwards of 30%. We want to increase ICV share also to that level,” Kathuria said.
Apart from a reduction in GST rates on automobiles and the announcement of a vehicle scrappage policy, the government can also mobilise infrastructure projects to aid demand recovery for commercial vehicles, Kathuria said. “Investments in infrastructure projects will lead to a demand from the construction industry. The auction of coal blocks can be a greater driver of demand from the mining industry.”
Medium and heavy commercial vehicle sales are expected to decline by 35-40% during FY21 having already declined 47% in FY20, according to a report from ICRA. Meanwhile, the decline for light commercial vehicles is expected to be around 17-20%. The sector is challenged by overcapacity with transporters, lower freight availability, a tight financing environment, and increased vehicle prices.
Ashok Leyland reported a 67% decline in overall sales during the April-September period to 21,321 units. The overall CV market declined by 56% during this period.
The company said that the sales of light and intermediate commercial vehicles (LCV and ICV) have shown quicker improvement due to rising demand from segments like e-commerce and agricultural perishable products. For medium and heavy trucks, demand recovery is slower with some demand trickling in from road construction and mining activities.
“Every month demand is improving. The Medium & Heavy Commercial Vehicle (MHCV) segment saw peak sales of 400,000 units in FY19. We have to wait and see if we recover those levels next year or the year after that. The recovery is faster in Intermediate Commercial Vehicles,” said Anuj Kathuria, chief operating officer, Ashok Leyland.
Kathuria said e-commerce as an activity has taken off in the last few months and is providing growth opportunities for commercial vehicle makers. Demand has also recovered well for two-wheelers, mass segment passenger cars, auto parts and FMCG products, which has resulted in an increase in demand for inbound and outbound logistics.
The company on Thursday launched an additional trim of intermediate trucks to better address the ICV market. “Our market share in ICV segment is 20% and in overall M&HCV segment is upwards of 30%. We want to increase ICV share also to that level,” Kathuria said.
Apart from a reduction in GST rates on automobiles and the announcement of a vehicle scrappage policy, the government can also mobilise infrastructure projects to aid demand recovery for commercial vehicles, Kathuria said. “Investments in infrastructure projects will lead to a demand from the construction industry. The auction of coal blocks can be a greater driver of demand from the mining industry.”
Medium and heavy commercial vehicle sales are expected to decline by 35-40% during FY21 having already declined 47% in FY20, according to a report from ICRA. Meanwhile, the decline for light commercial vehicles is expected to be around 17-20%. The sector is challenged by overcapacity with transporters, lower freight availability, a tight financing environment, and increased vehicle prices.
Ashok Leyland reported a 67% decline in overall sales during the April-September period to 21,321 units. The overall CV market declined by 56% during this period.
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