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- Apr 12, 2024
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Sales of medium and heavy trucks fell 30% in November, the steepest fall seen since the height of the global financial crisis in 2008-09, as slowing industrial activity, curbs on mining and delays in infrastructure projects force buyers to postpone purchases.
The trucks segment, often touted to reflect the wheels of a nation's economy, has suffered deeply due to a stagnant economy and slumping industrial activity with truck purchases at its lowest since March of 2009, despite highest ever discounts 40,000 to 1.75 lakh, an official affiliated to a leading truck maker said.
India's largest commercial vehicle maker, Tata Motorsled this decline, revealing a 40% drop for November 2012 with sales of 9,495 units compared with over 16,000 units in November 2011. Prior to this, the steepest fall in sales of medium and heavy trucks seen by Tata Motors was 43 months ago on February of 2009, when India's largest automobile firm in terms of sales revenues witnessed a decline of 48%. Not surprisingly, just last week, the company announced a block closure of three days starting November 29 to December 1. This was the second block closure in November and third for this year.
In an analyst concall, Tata Motors had said that it is operating at 70-75% of capacity currently. "We do not want inventory pile-up at the dealers' end and wanted to adjust our production as per demand," Tata Motors spokesperson had told to a news agency.
According to several vendors supplying to the top three truck makers in India, there is an under utilisation in capacity of around 30-35% across the sector. And some of the key dealers, ET spoke to say the inventory has started piling up post October.
According to rating agency ICRA, the year FY13 is likely to witness the second slowest year for M&HCV since FY09 with the market likely decline by almost 10% (9.6%) to 3,15,226 units, which will be lower than FY10 volumes.
"What is worrying is the inventory is piling up despite huge discounts. We are expected to post a significant loss this year," said a leading dealer of one of the country's leading truck makers.
"November was one of the worst months seen for a long time. The truck sales were down 50% plus. There is no clarity on the December (outlook) on the kind of volumes, we will do. The stock is piling up. Traditionally the second half is better than first half, if we are able to match last year's number, it will be very good. If the downslide continues, it will be very tough to make profits this year," said another leading truck dealer from Mumbai said.
The dealer said despite big discounts and 100% finance, trucks are not moving from the stock yards due to delays in payments. "The payments to the truckers and infrastructure companies which used to happen in 15 days is starting to get extended to 90 days. That is why people are either deferring purchases or buying second-hand trucks, which are available at attractive price," the dealer added.
"The trend is definitely worsening. Whether it has reached the bottom or worse is yet to come, one does not know. One view which is clearly emerging is that the market will only pick up momentum for medium and heavy trucks in the second half of 2013," said AK Birla, executive VP, sales & marketing at VE Commercial Vehicles, a joint venture between Volvo and Eicher said.
Five vendors that ET spoke to said the production schedules given by the top truck makers in the country before the beginning of financial year has dropped almost 30-40% today.
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