The industry is expected to register a growth of 20-22% in the current financial year over a low base of FY21, said Girish Wagh, head of the commercial vehicles business unit at Tata Motors.
About 569,000 CVs were sold last fiscal, fewer than that a decade ago in FY11 and almost half of the peak sales of over a million units in FY19. Of the total sales, medium and heavy CV sales stood at around 161,000, down 28% year on year, with light CVs accounting for the rest.
One reason for the slow recovery is that vehicle financers have been cautious in funding small transporters, who typically own fewer than 10 vehicles, given the sharp increase in their delinquencies over the past few months, Wagh said, adding that 95% of sales in this segment are financed by debt.
Also, smaller transporters themselves have been risk-averse after their experience during the Covid-19 pandemic, he said.
CV makers across the board had said at the end of the April-June quarter that a sales recovery was imminent. However, at 166,000 units, sales during the July-September quarter failed to exceed FY20 levels and were one-third less than the peak levels of FY19.
Wagh attributed this to an extended monsoon and lower profitability of transporters. An extended ]monsoon meant that mining activity resumed later than the norm, pushing back the sales for new CVs, he said.
Also, lower profitability of transporters meant that they avoided fleet expansion or replacement of their older vehicles.
The market condition is improving though, with better freight demand from sectors such as ecommerce, infrastructure development, mining, cement, steel and agriculture, among others, the country’s largest CV maker said.
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