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Trucks hardly selling despite incentives

Monday, 5 November 2012 - 9:17am IST | Place: Mumbai | Agency: dna

Sales of trucks and buses in the country dropped 24% in October despite huge discounts and a bevy of launches.

Sales of trucks and buses in the country dropped 24% in October despite huge discounts and a bevy of launches.

Indeed, the month, considered significant for the industry on account of the festivals, saw discounts of up to Rs2 lakh a vehicle, depending on the model.

Barring light commercial vehicles (LCVs), almost every segment offered heavy discounts in order to push sales.

However, high diesel prices and slow economic growth kept demand subdued.

Ashok Leyland increased its discounts from Rs45,000 to Rs55,000-60,000 on trucks during the second quarter, said an analyst, who did not wish to named.

“The discounts were so high that it almost negated the benefits the company got from Pantnagar unit. This might affect its financials for the second quarter.”

The company’s commercial vehicle sales, excluding small commercial vehicles, saw a 13% degrowth in October compared with the year-ago period.

The company spokesperson was unavailable for comment.

According to S P Singh of Indian Foundation of Transport Research and Training (IFTRT),  the intermediate commercial vehicle (ICV) category, which includes trucks in the 8-14 tonne range with Tata Motors and Eicher as the major players, saw discounts of up to Rs1.5 lakh.

Sales of medium and heavy commercial vehicles of Tata Motors dropped 28% in October, while  overall CV sales grew 21%, backed by strong sales of LCVs.

“Some discounts, depending on customers and markets, is a practice in the commercial vehicles industry. It keeps on varying. There is slowness in the economy, which is getting reflected in the medium and heavy commercial vehicles (M&HCV) segment,” said the Tata Motors spokesperson.

Sales of Eicher, on the other hand, dropped 6% in October.

“Negative sentiment is still pervading in the market. The situation is tough, hence the discounts are also higher, which would go down if the market revives,” said Vinod Aggarwal, CEO, VE Commercial Vehicles.

Going by the manufacturers, the slowdown in CV sales is cyclical. Experts, however, feel the problem is more severe this time round.

“Most of the manufacturers thought October will see a reversal in sales. But the sales dropped despite the optimism. The issue is not cyclical, the economy is very slow. The discounts are being offered even on the purchases of one or two vehicles. Also, bankers are taking subventions of auto finance,” said Singh of IFTRT.

Even new launches from Tata Motors and Bharat Benz failed to create an excitement in the market, said the experts.

According to the report provided by IFTRT, truck sales (5– 49 tonne range) during October nosedived by a huge 24.47%.The sharpest fall was witnessed in the multi-axle trailer category, which dropped almost 40% year on year, while sales of M&HCV segment fell 24%.

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