CV sales see continued momentum, all eyes on replacement demand to accelerate growth

The commercial vehicle industry seems to be firing on all cylinders, and despite the initial challenges, the segment seems to be coming on the path to growth.

The overall CV sales for the month of December came at 76,817 units, which was 21 percent higher than 63,631 units sold for the same period last year. For Q3 FY2023, the wholesales came at 213,230 units, a growth of 18 percent, versus 180,662 units for the same period last year.

The CV industry is seeing improved demand for M&HCV trucks and even passenger carriers have started seeing improved traction. In fact, except for Tata Motors’ I&LCV and SCV Cargo & Pickup all the segments were positive.

OEMs gear up for BS VI phase-2 norms

The country’s largest CV maker, Tata Motors sold 32,954 units in December, which was 6 percent higher YoY, and 20 percent higher over the previous month. For Q3 FY23, while the retail sales was strong, the wholesales were flat, on the back of the company gearing up for the transition BS VI phase-2 norms.

Girish Wagh, Executive Director, Tata Motors said, “Tata Motors commercial vehicles domestic sale in Q3FY23 at 91,704 units grew 1.3 percent over Q3FY22, while being 2 percent lower than those recorded in Q2FY23. Our continued focus on retail during the quarter resulted in retail sales surpassing wholesale by 13 percent in December’22, by 6.3 percent in Q3FY23, and reducing inventory as we transition towards BSVI phase-2 norms.”

“The growth in Q3FY23, was led by stronger sales of MHCVs (+35% vs Q3FY22) and a robust recovery in passenger carriers demand (+84% vs Q3FY22).  Improving fleet utilisations, pick up in road construction projects and increase in cement consumption catalysed the demand recovery for MHCVs. CV exports, however, remained subdued due to the prevailing economic situation in most overseas markets. Going forward, we expect a good replacement demand, especially in MHCVs in Q4 FY23, as we also maintain a close watch on the evolving geopolitical situation, inflation and interest rate risks on both the supply and demand,” he added.

Mahindra & Mahindra sold 20,080 units in December, which was 26 percent higher YoY, but just 2 percent higher than the previous month. The wholesales for Q3 FY2023, came at 60,651 units, which was 32 percent higher YoY.

Ashok Leyland reported 17,112 units wholesales for December, versus 11,493 a year ago, which is 49 percent higher YoY, an 30 percent growth over the previous month. For Q3 FY2023, the sales came at 44,166 units, a growth of 43 percent YoY.

For Volvo Eicher too, the month of December saw 28 percent growth in wholesales. The company sold 6,671 units, versus 5,192 units a year ago, and 4,483 units a month earlier. For Q3 FY2023, the company wholesales came at 16,709 units, which was 26 percent higher YoY.

Price hike could disrupt growth

Going forward, as companies prepare to introduce vehicles to meet the BS VI phase-2 norms, the price hike in models could somewhat disrupt retails. But on the other hand, the infrastructure growth across the country, and demand for higher uptime, could act as a tailwind.