The commercial vehicle sales for February 2023 grew 11 percent YoY but were almost flat or 5 percent growth over the previous month. During the month, the industry shipped 80,354 units, compared to 72,434 units last year and 76,407 units last month.
It is important to understand that with phase 2 of BS6 emissions norms coming into effect from April 1, 2023, OEMs and retailers are maintaining a caution.
The reason is simply put that the transition from BS4 to BS6 in 2020 had a severe impact on the margins for OEMs as well as the dealer fraternity, where the industry had seen heavy discounting and losses due to clearing of old stock.
SCVs seeing a slowdown or production rationalisation
For Ashok Leyland
Volvo Eicher Commercial Vehicles (VECV) continued its cautious sustainable approach with wholesales of 6,799 units, up 33 percent YoY but flat growth in comparison to the previous month.
Vinkesh Gulati, Director, United Group said that CV makers are trying to ensure that there is no unsold BS VI stock (pre-OBD) and hence there seems to be a slowdown in month-on-month sales. The lessons learned during the transition from BS IV to BS VI had caused challenges of unsold inventory, and heavy discounting, which impacted the financial performances of the stakeholders. At the same time, he says there seems to be also the issue of semiconductor shortage again impacting production for some OEMs.
Going forward, the month of March is also expected to see a lull for most segments, as the industry gears up toward transitioning to the upcoming emission norms. On the other hand, this could also see a marginal hike in prices for certain products. The supply of semiconductors has also started seeing some pressure, but the exact impact of the same is yet to be ascertained.
The commercial vehicle industry is very cyclic in nature and is quite prone to sudden shockers which could have long-lasting impacts. Unlike the other segments, the CV segment in India is said to have a six-year replacement cycle, and with the upcoming BS6 Phase 2 norms coming into effect from April 1, could again see a hike in vehicle prices, thus possibly pushing for pre-buys or a deferred purchase decision.
|COMMERCIAL VEHICLE SALES IN INDIA|
|Feb ’23||Feb ’22||Change (in units)||Change (in %)||Jan ’23||Change (in %)|
|SCV Cargo and Pickup||14,218||16,303||-2,085||-13%||14,094||1%|
|Mahindra & Mahindra|
|LCV < 2T||2,515||4,048||-1,533||-38%||2,675||-6%|
|LCV 2 T – 3.5 T||17,241||15,431||1,810||12%||18,101||-5%|
|LCV > 3.5T + M&HCV||1,087||687||400||58%||948||15%|
|Volvo Eicher CV|