As the country witnessed a gradual rise in infrastructure activities and growth in the e-commerce sector, retail sales of commercial vehicles rose 12.7% on-month in November.
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The sales of commercial vehicles in India rose significantly in the month of November, as the economic revival caught pace after months of lockdown. As the country witnessed a gradual rise in infrastructure activities and growth in the e-commerce sector, retail sales of commercial vehicles rose 12.7 per cent on-month in November, said a report by Care Ratings. However, the rise in demand was mostly seen in light commercial vehicles. While the demand for the bus segment remained muted as most schools continue to remain closed and a large number of offices still practice the work from home culture, the medium and heavy commercial vehicles also grappled.
The major reasons for low demand for medium and heavy CVs were inflated prices of BS-6 models, sourcing finance, high fuel prices, and no implementation of the scrappage policy, the report added. Compared to passenger vehicle sales, the sales of commercial vehicles is believed to be a more important parameter to gauge economic progress.
Nevertheless, a comparison on a year-on-year basis shows that the retail sales of automobiles are at nearly 80 per cent of last year’s levels, which reflects an impressive recovery of the sector in a pandemic year. The quick revival in the auto sector can be attributed to the increased sales of 2-wheelers and passenger vehicles. While the 2-wheeler sales rose 35.7 per cent on-month, 3-wheeler sales jumped 8.1 per cent, and passenger vehicles sales rose 16.5 per cent on-month. On the other hand, tractor sales remained the only segment that saw a month-on-month contraction during November 2020.
Though the vehicle sales are on a rise, reaching pre-covid levels of sales seems improbable in FY21, as consumer demand for automobiles is expected to stagnate in the fourth quarter of the current fiscal, Care Ratings said. The festive season has nearly ended and hence, near-term demand for automobiles is expected to depend on how quickly the economy progresses and lifts consumer incomes. It is to be noted that November 2020 was a significant month for discretionary purchases as it included main festivals and marked the onset of wedding season in India.