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Medium, heavy CV segment may see a muted demand in March quarter


The medium and heavy truck industry will likely experience a subdued demand in the next three months even as it may end the current fiscal with a single-digit growth.

The Indian commercial vehicle (CV) industry registered a decline of 2 per cent in retail sales volumes year-on-year (y-o-y) basis and a sequential drop of 5 per cent in November 2023.

Industry representatives attributed the decline in CV volumes to the high base last year and a slowdown in rural sentiment exacerbated by unseasonal rains and State elections, which impacted sales post the strong growth in the festive period.

In the medium and heavy CV segment, retail volumes witnessed a contraction of 8 per cent sequentially in November 2023, but were flattish on a y-o-y basis. CV market leader Tata Motors registered a decline of 4 per cent in its overall CV sales in November this year, while Ashok Leyland’s medium and heavy truck sales fell 13 per cent.

Higher volumes

The sequential decline was on the back of a high base in the festive period. Despite the sequential decline, the volumes in November 2023 were higher than the median volumes in the last six months, driven by the replacement demand and steady traction from mining, infrastructure, and construction activities.

“Going forward, volumes are expected to remain subdued y-o-y basis driven by the pause in infrastructure activities as the model code of conduct will kick in during the next quarter, ahead of the General Elections, as also the high base of Q4 FY2023 due to pre-buying before the implementation of BS VI 2.0 emission norms,” said Kinjal Shah, Vice President and Co-Group Head – Corporate Ratings, ICRA Ltd.

Tata Motors’ Executive Director Girish Wagh had also indicated that Q4 of this fiscal could be flattish for the industry due to last year’s high base.

In the light commercial vehicle (LCV) segment, retail volumes witnessed a decline of 3 per cent sequentially and by 6 per cent y-o-y due to a continued slowdown in e-commerce demand and some cannibalisation from electric three-wheelers. However, Ashok Leyland managed to post positive growth of 7 per cent in November.

Meanwhile, the bright spot in the CV industry now is the bus segment, which continues to maintain strong sales momentum aided by the opening up of offices and educational institutions, and replacement demand.

During the April-November 2023 period, the domestic wholesale CV volumes grew 3.5 per cent compared with the year-ago period.

Despite the expected slowdown in the next quarter, rating agency ICRA has projected an increase of 2-4 per cent domestic CV volumes in FY24.

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