Big boom in commercial vehicles segment

Surge in transport business gives a fillip to commercial vehicle (CV) sales volumes, lending support to the revival of the Indian automobile industry

When this writer, Veeresh Malik, was driving near the India-Nepal border, he observed a lot of movement of bare chassis for heavy vehicles on the roads. He stopped at a roadside dhaba to chat with some truck drivers who had picked up these chassis for converting into trucks in some cities in Punjab. It turned out that these truck drivers were minting money for the first time in years, earning a premium on the allotment and purchase and then subsequent resale of these chassis, which till a few months ago were lying unsold all over the country.

These are irrefutable signs that the CV segment, which hitherto was faltering in the wake of a recession, is slowly finding its feet. The transport business has been a loyal and faithful tracker of the direction in which the winds are blowing. That a boom is on is visible on our roads, with trucks plying to and fro, especially the roads in the interior, which by-pass the bigger cities. The CV segment is definitely revving up again, providing strong momentum to the domestic automobile industry.
Another strong indicator of the current boom in the transport business is the quick turnaround time being witnessed by truck drivers. Especially in some of the new seaports in Gujarat, Tamil Nadu and Andhra Pradesh, their turnaround time has seen a multi-fold jump. These are drivers who, at one time, were spending weeks in Mumbai or JNPT waiting for their trucks to get unloaded. They now talk of three-five round trips in a fortnight from Punjab to ports in Gujarat, with cargo available both ways.

Recent industry data also lends support to this argument. Tata Motors, India’s largest CV manufacturer by volumes, has registered phenomenal growth in this segment. Medium and Heavy Commercial Vehicle (M&HCV) sales have jumped 116% year-on-year. Although this astounding rise is in part due to the low base effect of last year’s slump, the 5% growth in month-on-month sales indicates that the segment has finally come out of its shackles.

An Anand Rathi research report confirms, “In November 2009, Tata Motors’ volume increased 65.5% y-o-y to 54,108 units. While volume growth appears higher due to the lower base of November 2008, growth is also being driven by better demand, particularly for M&HCVs.” The report also mentions that Light Commercial Vehicles (LCVs) sustained the good volume momentum, with 62.8% y-o-y growth. Going forward, the analyst expects the segment’s recovery to sustain.
Veeresh Malik with Sanket Dhanorkar

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