Volvo Eicher CV sales get GST, e-commerce wings, jump 75%

Sales are booming for Volvo Eicher (VE) Commercial Vehicle Ltd seeing boom times.

The company has reported 75% jump in sales volumes on account of a spurt automotive sector and opening of Maruti Suzuki's huge plant in Sanand, Gujarat, rejigging of warehouses by e-commerce companies post implementation of GST. The company expects the tempo to continue this month and peak in March, when traditionally sales are higher as it is the last month of a financial year.

The company's market share spiked to 36% in January, from about 32% in the segment in last 10 months.

As per the data collated by C-NTRUM sourced from Society of Indian Automobile Manufacturers (SIAM), sold 13,953 units in the third quarter of this fiscal, out which 12,324 units were good carriers and 1,629 units passenger carriers.

Shyam Maller, executive VP (sales & marketing) at VECV, said the four-wheeler and two-wheeler manufacturing is witnessing a high trajectory in India, which, in turn, is driving the logistic supply of vehicle components and spare parts business.

The demand from automotive sector has amplified as Maruti Suzuki, which ended 2017 with a market share of 49.9%, has been ramping up its Sanand plant. Reports claim that Maruti Suzuki has plans to produce about 1.5 million vehicles in the state in over a decade, which translates into creation of huge ecosystem for components and spare parts suppliers.

Similarly, several other OEMs too are expanding their capacity across the automobile hubs in the country in order to meet the growing demand in one of the world's fastest growing automotive market.

"Typically, the supply-chain side of automotive industry is doing well and therefore it obviously needs trucks" said Maller.

Another important factor which has triggered demand for commercial vehicles is a consolidation and rejigging of warehouses by e-commerce companies in the post GST regime. The e-commerce companies are now setting up super large warehouses and catering to 3-4 states with it, unlike under the earlier VAT regime when each state had different warehouses. The reason being that under GST the same tax is applicable across all the states in India. "Now you are really seeing hub-to-spoke system working more intensely than what it was in the past," Maller said.

Additionally, the stricter enforcement of overloading regulations is also helping in driving up the sales volume as fleet owners are now looking to invest in higher-tonnage trucks.

Industry experts claim that due to spike in CV demand, the OEMs have asked the component manufacturers to enhance the supply. Most of the major component makers are producing utilising full capacity to meet the demand. Talking about the rising demand, Jan-Oliver Röhrl, CTO and director, Bosch Ltd, said, "The market has been volatile and we see double-digit growth in certain CV segments. Our production is closely tied to the order forecast from our customers and are doing our best to meet the fluctuations."

Röhrl said Bosch is well-positioned to meet fluctuations in demand through its international production network, where short-term fluctuations in demand are compensated by supplies from global sister plants.

DRIVING FASTER

• Several OEMs are expanding their capacity across the automobile hubs in country in order to meet the growing demand
   
• The company's market share spiked to 36% in January, from about 32% in the segment in last 10 months