Getty ImagesTata Motors, India's largest commercial vehicles (CV) maker, expects the CV market grow by more than 30% in FY-22, albeit on a low base, as a quick economic recovery and an expected double-digit GDP growth drive demand for trucks.
However, the maker of Prima and Ultra trucks said that the headwinds of rising commodity prices and shortage of semiconductors may play truant to this recovery.
The high input costs have forced the automaker to consider a price increase effective from April – its third in less than a year, according to Girish Wagh, president of commercial vehicles business unit at . This is on top of the sharp price increase last April when it was mandated to sell BS-VI vehicles in India which cause less pollution but are more expensive to make.
“The projection for GDP growth next year by the government and by the RBI is quite good and this will certainly lead to an increase in the (CV) industry. The industry should grow around mid- to high-30s kind of range in terms of percentage next year,” Wagh told ET.
“And while these growth rates appear to be high, we have to understand that the base had dropped significantly and that's why these growth rates are higher,” he said.
The Indian CV industry achieved its peak sales in FY19 followed by a decline of over 25% in FY20 and a similar decline is expected in FY21, Wagh said, adding that this effectively almost halved the sales of the industry in two years.
While a sales recovery is expected in FY22, a shortage of semiconductors may impact production leading to a demand for new CVs outstripping the supply. The shortage of semiconductors could impact the first two quarters of the next financial year, according to Wagh.
“One will have to therefore keep a watch on this semiconductor issue, and see how to manage and balance out our production,” he told ET.
Rising commodity prices could also drive up inflation hurting the economy and impeding the recovery in CV sales, he said.
However, the maker of Prima and Ultra trucks said that the headwinds of rising commodity prices and shortage of semiconductors may play truant to this recovery.
The high input costs have forced the automaker to consider a price increase effective from April – its third in less than a year, according to Girish Wagh, president of commercial vehicles business unit at . This is on top of the sharp price increase last April when it was mandated to sell BS-VI vehicles in India which cause less pollution but are more expensive to make.
“The projection for GDP growth next year by the government and by the RBI is quite good and this will certainly lead to an increase in the (CV) industry. The industry should grow around mid- to high-30s kind of range in terms of percentage next year,” Wagh told ET.
“And while these growth rates appear to be high, we have to understand that the base had dropped significantly and that's why these growth rates are higher,” he said.
The Indian CV industry achieved its peak sales in FY19 followed by a decline of over 25% in FY20 and a similar decline is expected in FY21, Wagh said, adding that this effectively almost halved the sales of the industry in two years.
While a sales recovery is expected in FY22, a shortage of semiconductors may impact production leading to a demand for new CVs outstripping the supply. The shortage of semiconductors could impact the first two quarters of the next financial year, according to Wagh.
“One will have to therefore keep a watch on this semiconductor issue, and see how to manage and balance out our production,” he told ET.
Rising commodity prices could also drive up inflation hurting the economy and impeding the recovery in CV sales, he said.
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2 Comments on this Story
 | Praker 5 days ago Ban all imports from China |
 | Suresh Kamath5 days ago These are very Good Growth potential for the CV Industries and with the Old vehicle Scrapping Schemes to be Implemented these CV Industry and with EV going to be the NEXT Growth Cycle for the Country and EV may be a HUGE POTENTIAL for EXPORTS and good Prospects for the Manufacturer as TATA who have done a lot of Research and hope the CASH on these Development and better the Earnings for the Company in the coming Quarters. All the best to the most efficient TATA Team to achieve the best for the Company |