TNI || New Delhi || 19th Nov 2021
As per a senior executive from Tata Motors, lower demand from small transporters who majorly account for more than half of the commercial vehicles market has dampened the sales recovery in India.
The lower demand can be attributed to lenders reluctance in extending finance.
The industry, according to Girish Wagh who is the Commercial Vehicles Business Unit Head for Tata Motors is expected to grow between 20-22 per cent in the current financial year.
As per the updated numbers, around 569,000 CVs were sold in the last fiscal which is fewer than a decade ago.
Out of this number, the heavy and medium CV sales was at 161,000 which was down by 28 per cent year on year.
The light commercial vehicles accounted for the rest of the numbers. One of the reasons for recovery at a snail’s pace is financiers not showing a positive intent towards funding small transporters.
These small transporters are usually the ones who own less than 10 vehicles, and given the sharp surge in their delinquencies, has raised an alarm among small or big funding institutions.
The transporters have been at high risk due to COVID-19 and which is what is affecting their credibility now when it comes to getting funds that otherwise used to be frequent in the pre-pandemic era.
In April-June quarter ending this year, CV makers had said that the road to a sales resurrection was imminent. However, the numbers in July-September were a big disappointment in this category.
Wagh has attributed this to a prolonged monsoon and lower transporter profitability. Extended monsoon meant that the mining activity began at a later stage than usual, which caused a major dent in the CV numbers.
Lower revenue gave rise to an avoided fleet expansion or even replacement of the older vehicles. However, Wagh feels that the market situation is improving with a brief freight demand now.