Commercial vehicle sales in India have witnessed a steep decline: Ind-Ra

According to Ind-Ra, country's most reputed credit rating agency, Medium-to-Heavy Commercial Vehicles (MHCV) have witnessed a continuous as well as alarming decline in sales over the years. Could this be due to the stricter emission norms? Read on to find out!

By: | Published: May 17, 2017 3:51 PM

Concern for environment by non-profit organisations such as the National Green Tribunal as well as authoritative Government bodies have adversely affected the commercial vehicle sector in India. According to India Ratings and Research (Ind-Ra), the Medium and Heavy Commercial Vehicle (MHCV) sector has witnessed a steep as well as consistent decline in sales since 2011. In April 2017, this sector posted a downfall of 55 percent in the medium CV sector and 73 percent decline in the heavy CV category, compared to the same period in 2016. The agency also stated the fact that Supreme Court's decision on ban of sale as well as registration of vehicles compliant to BSIII emission norms from 1st April, 2017 aided in a marginal increase in sales numbers as a number of commercial vehicle manufacturers wanted to clear their existing stock as well as the units remaining with dealerships. However, attractive but discounts unheard of didn't quite bring the sector up. This move, although with a good intent, didn't bear any good fortune for MHCV manufacturers eventually leading to declining sales figures for the month of March as well.

The reason for this according to Ind-Ra is that potential buyers wish to wait and watch the new vehicles being sold due to two key reasons. One being the performance of the new BSIV vehicles and secondly assessing any improvement in the industrial performance. The new emission norms compliance will bring up the cost of any MHCV vehicle by up to 15 percent, on an average which could also add to the delay in purchasing a vehicle from this category.

After the ban on sale as well as registration of BSIII vehicles, a number of manufacturers recalled their vehicles so that they could be exported to countries where BSIII emission norms are still applicable. Ashok Leyland has used indigenous technology to convert 10,000 units of their BSIII vehicles to BSIV. The Society of Automobile Manufacturers (SIAM) also filed a petition urging Supreme Court to reconsider their decision about the BSIII vehicle sale and registration ban after 31st March, 2017.

The sales of the MHCV sector has been dwindling because of the unpredictability this sector has faced for a number of years due to various Government policies as well as its concern for the rising pollution levels in the country. In addition, the heavy fines imposed on overloaded vehicles also failed to garner new vehicle sales in terms of making the segment profitable. The future for the MHCV sector looks bleak for the time being, however, introduction of new technologies such as hybrid vehicles as well as fully-electric commercial vehicles may turn the table for this category of vehicles.

Also Read: Daimler India Commercial Vehicles pitches for mandatory AC in trucks

In the passenger segment, such considerations are already underway and manufacturers in this segment are considering cleaner and greener methods for personal mobility. Although, the commercial vehicle sector is far behind in this context which needs to be addressed immediately. In addition, another challenge, particularly for electric vehicles, is the absence of infrastructure. The government needs to focus on building a proper infrastructure such as charging stations and fast charging points across the nation in a cost-effective manner alongside implementation of new rules for passenger as well as commercial vehicles which should increase the acceptability towards a greener future.

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