Society of Indian Automobile Manufacturers (SIAM) on Friday has announced that it will no longer release the monthly sales data for commercial vehicles. Instead, SIAM is switching to releasing the CV wholesales data quarterly.
This strategy shift appears to be the outcome of the Covid-19 pandemic that has resulted in a weak economy and low demand for the entire automobile sector, especially the commercial vehicle segment has been impacted severely. While the other segments like passenger vehicle (PV), two-wheeler (2W), tractor etc are slowly coming back to the growth path, commercial vehicle segment is still in the red zone and facing several headwinds.
Unlike the PV and 2W categories, rebound in the CV segment is taking place at a slower pace. While the PV and 2W sales volumes grew 17.02% and 0.17%, respectively, during July-September 2020 period, the wholesales volume of CVs slumped by 20.3%, as stated by SIAM.
SIAM’s move comes shortly after India’s largest commercial vehicle manufacturer Tata Motors stopped reporting the monthly wholesale numbers from April 2020.
Commenting on the new strategy, Rajesh Menon, Director General, SIAM, said, “Some of the OEMs in the CV segment are not reporting wholesale numbers on a monthly basis because of which we will be sharing CV sales numbers only on a quarterly basis.”
Tata Motors that holds over 42% of the market share in the domestic commercial vehicle market said in a release in April 2020, “In the current volatile scenario, we believe this helps us to take the right long-term decisions for the business, helps our dealers to focus on serving customers and helps our investors to focus on the long-term drivers of the business and avoid needless short-term volatility.”
According to an analysis by the rating agency ICRA, despite CV retail sales reviving, it remains a far cry to reach the pre-Covid levels. It also said that as compared to the monthly sales of more than 80,000 units during pre-Covid times, in September 2020, the CV sales trend showed sales of less than 40,000 units, which is more than 50%. This trend comes even after four months of sequential improvement, after the sales resumed from May 2020.
As ICRA’s analysis shows, demand growth in the commercial vehicle segment has dropped by 85% in the first quarter of FY21. As per the forecasts made by the rating agency, growth of the MHCV and bus segment will decline -35% to -40% in FY21 and grow by 40%-45% in FY22. The LCV sales too would decline by -17% to -20% in FY21 and grow by 15%-20% in the next financial year.
Giving the outlook for the CV sector outlook for FY21, ICRA said that capacity utilisation in the segment would fall to 36% in current fiscal.
Clearly, the entire Indian automobile industry is going through a rough patch and it is even tougher for the commercial vehicle segment. SIAM’s latest move reflects that trend only.
Also Read: Indian auto industry takes a decadal step back: ICRA