LCV growth picks up in Oct-Dec after falling for 6 months in a row

After registering a decline in volumes in the first six months of the current financial year, the light commercial vehicle (LCV) segment has managed to stage a recovery since October on the back of partial recovery in the rural markets and decent growth in manufacturing sector which enhanced the need for the last mile connectivity…

After registering a decline in volumes in the first six months of the current financial year, the light commercial vehicle (LCV) segment has managed to stage a recovery since October on the back of partial recovery in the rural markets and decent growth in manufacturing sector which enhanced the need for the last mile connectivity and inter-city movement of goods.

During the October to December period, LCV segment grew by 4.26% y-o-y to 98,859 units as compared to 94,288 units in the corresponding period in FY 15. According to Abdul Majeed, partner, Pricewaterhouse Coopers, as a result of the hub and spoke model of transportation the growth in the medium and heavy vehicle segment has started to trickle down to the LCV segment.

Last time when this segment registered an increase in volumes was in January, 2015, when monthly volumes increased by 5.3% y-o-y to 52,481 units.

The growth in the LCV segment has come against a very low base and the volumes are nowhere near the peak of FY13 when total volumes stood at 524,887 units. In the April to November period, light commercial vehicles volumes decreased by 3.52% y-o-y to 274,129 units.

“The rural economy has managed to recover partially which contributed the most towards the growth in the LCV volumes. Also large chucks of the volumes are coming from replacement demand as buyers have postponed it for a long time,” said Kumar Kandaswamy, Partner, Delloitte.

Gr2

Tata Motors and Mahindra and Mahindra (M&M) have been the prime beneficiaries of this growth in the segment. Though, Tata Motors has been a leader in the light commercial vehicles segment, M&M has managed to gain significant market share in the sub two-tonne segment by launching Jeeto in the third week of June.

In December Tata motors registered growth in the LCV segment for the first time in the current financial year when monthly volumes increased by 11% y-o-y to 14,674 units. However, during the April to December period the company’s LCV volumes declined by the 18% y-o-y to 118,797 units.

Unlike Tata Motors, M&M has managed to increase its volumes in the light commercial vehicle segment in the current financial year on the back of strong performance from new products like Jeeto and Supro. After the launch of Jeeto M&M’s market share has doubled to 30% from 12 % in the sub two-tonne segment.

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This article was first uploaded on January twenty-six, twenty sixteen, at six minutes past one in the night.
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