On a year-on-year (YoY) basis, August and September 2024 witnessed a degrowth of 11-12%.
02 Oct 2024 | 217 Views | By Shahkar Abidi
India's commercial vehicle (CV) market presents a mixed picture, with contrasting trends offering both cause for concern and cautious optimism for automotive players.
On a year-on-year (YoY) basis, August and September 2024 witnessed a degrowth of 11-12%. This reflects the impact of factors like the summer heat wave, model ...
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India's commercial vehicle (CV) market presents a mixed picture, with contrasting trends offering both cause for concern and cautious optimism for automotive players.
On a year-on-year (YoY) basis, August and September 2024 witnessed a degrowth of 11-12%. This reflects the impact of factors like the summer heat wave, model code of conduct during elections, and the monsoon season, which typically dampen demand. However, a rosier picture emerges when considering month-on-month (MoM) data. Here, a heartening recovery of 2% and 15% was observed in July-August and August-September respectively.
“There are two ways to look at the CV industry data," remarked Amit Mohan, Business Head – Logistics and Infrastructure, Kotak Mahindra Bank Ltd. "One which is sequential and another YoY. Let's look at the data YoY and we realise that the month of August and September 24 were almost 11-12% lower than the previous year same period. However, when we see July, August and september 2024 sequentially, they show a recovery of 2% (July24 to Aug24) and 15% (Aug24 to Sept24)."
This revival, however, might be short-lived. Mohan warns that high dealer stock levels in September suggest a potential moderation in the near future. Additionally, the viability of truck operations remains impacted, with the initial festive season demand being subdued. "This comparison shows the impact of the heat wave, model code of conduct and monsoon in the first 5 months and subsequent recovery albeit moderated post adjusting the wholesale numbers (read higher stocks at dealers) in September 24.
We are at a time when the viability of truck operations has been impacted and the initial festival season has been timid on demand. In my view, the industry units which currently have degrown by 4% will remain in this zone provided we see some uptick in demand in the month of October which changes the trajectory," Mohan continued.
His comments comes as CV manufacturers have been witnessing degrowth in their domestic wholesales in the past few months, including in September 2024. For instance, Chennai-based Ashok Leyland reported that its total domestic wholesales for its commercial vehicles in September 2024 stood at 16041 units, a drop of 12% in comparison to 18,193 units during the corresponding month of the previous year. Likewise, Mumbai-based Tata Motors' domestic commercial vehicle wholesales slid by 23% to 28,631 units during September 2024, as compared to a similar period last year, when it registered 37,214 units. Mahindra & Mahindra, too, witnessed mixed results with most of the categories it operates in showing degrowth except for Light Commercial Vehicle (LCV) category weighing more than 3.5 tonnes, including medium and heavy commercial vehicles (MHCV).
Other industry experts are echoing similar sentiments, with ShareKhan, a research consultancy firm, in its report in September calling the CV sales drop a temporary blip, anticipating a healthy momentum in the MHCV industry, in the second half of FY25. As per a report released by ShareKhan, the outlook for the MHCV sector is improving as election-related uncertainties have subsided and government infrastructure spending is expected to gradually increase. Secondly, freight rates have improved over the past two months, driven by a rise in logistics activity following the formation of a new government and the upcoming festive season.