The country’s top commercial vehicle maker Tata Motors said it has worked out key priority areas this fiscal to take advantage of the recovery in demand, amid continuing major challenges such as commodity price hike and semiconductor shortages.
The company said it has been witnessing a far more positive sign when compared with the year-ago post-lockdown phase.
“We are definitely seeing an improving economic scenario and revival of positive business sentiments. Freight availability is also getting better. Trucking industry says there is cargo to carry now. The continued government spending on infra and resumption of construction activities will drive demand for trucks. Growth of core sectors such as cement and steel will also augur well for the industry,” Rajesh Kaul, Vice-President, Sales & Marketing, CVBU, Tata Motors, told BusinessLine.
Key growth drivers
Scrappage policy is expected to give an impetus to CV industry, while the growth in e-commerce, driven by increase in online shopping due to social distancing and other restrictions, has fuelled last-mile transportation, thereby driving strong demand for cargo trucks across small and intermediate commercial vehicle segments.
“Also, a good monsoon and associated impact will help. So, this time, recovery in CV industry will be much stronger than last year despite apprehensions about possible resurgence of a third wave,” said Kaul.
While the CV industry volumes have been improving month-on-month, they are still lower than 2019 levels, as freight availability is yet to touch H2FY21 levels. Meanwhile, prices of trucks have gone up 15-20 per cent from the BS6 introduction period last year to now.
So, Tata Motors has identified some priorities for the current fiscal in view of change in customer expectations and prevailing challenges. “Our immediate priority is to work with our customers, provide them assistance and help to ensure business continuity. This will include focus on vehicle service and after-sales support as also constant engagement with customers to understand their requirements. Also, we will make necessary interventions to ensure that there are minimal business disruptions in our plants and our channel partners,” said Kaul.
More than emission evolution
The company is hopeful of maintaining the sales momentum helped by its BS VI trucks, which, according to Kaul, not only comply with new norms but also offer substantial value in terms of low-cost operations and higher fuel efficiency, to ensure best-in-class total cost of ownership for buyers.
“We actually looked at the BS6 transition more than a mere emission evolution. We upgraded the entire product portfolio to bring value to the customers. As a result, we see good acceptance of our products. Also, we came out with a new range of products for specific applications that are bringing incremental volumes,” he added.
The Indian commercial vehicle industry reported a 21.7 per cent decline in FY 2020-21 compared to a 30 per cent fall in FY 2019-20, due to the Covid-19 pandemic, lower freight utilisation, constraints in obtaining financing and some hesitation to buy new trucks due to higher prices of BS VI vehicles.