Will bounce back by Q4, say dealers

Ronendra Singh New Delhi | Updated on September 05, 2019 Published on September 05, 2019

Slowdown in the sales of commercial vehicles is not that bad as the original manufacturers (OEM) make it out to be. In fact, many dealers are of the view that the slowdown is cyclical and normalcy should return by fourth quarter of this financial year.

Some dealers even partly blame the manufacturers for pushing excess inventories to the dealer network. Dealers that BusinessLine spoke to said that many factors such as new axle norms that kicked in last year (where trucks can carry more loads), GST and improvement in roads infrastructure have impacted the demand for new commercial vehicles.

“For instance, between two States, a vehicle used to be for 24-40 hours on road, that has now reduced a lot. That has lead to a reduction in fuel cost and turnaround time of the vehicles. The industry has upgraded from 10-wheelers to 16 wheelers — from trucks to tractor trailers — so ultimately one driver who was earlier carrying 10-12 tonnes is now carrying 35 tonnes,” Mohan Himatsingka, one of the top dealers for Tata Motors, said on the sidelines of ‘Auto Retail Conclave’ organised by Federation of Automobile Dealers Associations (FADA).

He added that the inventory level is still high at around 10 weeks, which should be ideally be three weeks for the commercial vehicles.

However, another dealer of commercial vehicle said that the only way of revival for the sector will be the revival of mining and construction industry, and also the government implementing the scrappage policy at the earliest.

“Going by the present scenario, unless there is scrappage incentive, I don’t think there will be a pick up in the CV industry,” Nikunj Sanghi, International Director and past President, FADA, said.

He also said that of the 286 dealers closing down across India, only 15 per cent are CV dealers.

Ashish Harshraj Kale, President, FADA, said that the situation is getting back to normalcy now and banks are also showing interest in giving loans now. “Till July, you would have noticed there were no calls from banks for loans, but in the last 15-20 days we are getting calls from banks showing interest for giving loans. So, things will improve now,” he said.

According to the Society of Indian Automobile Manufacturers, the total sale of CVs stood at 56,866 units in July this year — down 26 per cent compared with 76,545 units in the corresponding month last year. While FADA data show 23,118 units of CVs registered during July — down 14 per cent against 26,815 units in July 2018.

Published on September 05, 2019
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