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Commercial Vehicle Industry Sales Analysis FY19

April 12,2019

For the first time, the Commercial Vehicle sector crossed one million domestic sales mark in FY18-19. The major demand drivers were new infrastructure projects and fleet replacement.

As per SIAM (Society of Indian Automobile Manufacturers), the commercial vehicle manufacturers dispatched 1,007,319 units from their factories across India in the last fiscal compared to 856,916 units in FY'18, registering a growth of 17.6%.

The top 3 players - Tata Motors, Mahindra & Mahindra and Ashok Leyland, which commanded more than 86% of the market, grew at an almost similar pace of 19%, 15%, and 17% respectively.
This led to no major change in its market share during the period under review. 

Top four CV makers

April-March FY'18

Market share

OEM

Market share

April-March FY'19

376456

43.93

Tata Motors

44.41

447,323

216,803

25.30

Mahindra & Mahindra

24.68

248,601

158,612

18.51

Ashok Leyland

18.37

185,065

55,872

6.52

VECV-Eicher

6.13

61,732

         

Source: SIAM

The H1 of FY19 showed strong growth of 37.82% but in H2 the growth shrank to 3.3%. The growth rate in the H2 moderated mainly due to revised axel norms, liquidity crunch and uncertainties due to upcoming general elections. The axle norm increased the freight carrying capacity of medium and heavy commercial vehicles (M&HCV) by 20% that led to lower demand for new trucks. What further trimmed the demand was the tightened liquidity scenario due to fall out of IL&FS which led to NBFC becoming cautious in lending which also dented new purchases. Additionally, the acute absence of new launches for a prolonged period in the last quarter further crippled the demand in the second half of the year. The demand of cargo trucks started seeing volume contraction post the implementation of revised axel norms whereas the tippers trucks demand remained resilient and showed a growth of 14.6% at 390,740 units in FY18-19, largely due to strong demand for tipper trucks from infrastructure and mining sector.

Tata Motors, leading CV player, led the growth in the M&HCV where it reclaimed over 50% of sub-segment segment's market share pie after 3 years. It last captured a 53% market share of M&HCV segment in FY’16. Tata Motors’ M&HCV sales increased by 17 percent in FY’19 to 195,712 units. Not only this, the company also maintained pole position in light commercial vehicle (LCV) segment, where it grabbed 40.8% market share at 251,611 units, defeating Mahindra & Mahindra (M&M). In comparison, M&M sold 236,377 units, witnessing a growth of 15% with 38.3% market which is a decline of 2 percent in the market share. This is also the highest fall of market share by any manufacturer in the LCV segment last fiscal year. 

The relatively new entrant in the LCV segment, Maruti Suzuki doubled its market share from 2% in FY’18 to almost 4% in FY’19 with its sole product Super Carry. The company sold 23, 874 units of Super Carry registering a growth of about 135% over the previous fiscal. Overall LCV segment recorded a growth of 19.4% at 616, 579 units aided by sharp demand from the FMCG, e-commerce and last-mile transportation sectors. The sub-segment cut a 61% share of the total CV market in FY’19.

The outlook of CV Industry in 2020
As per SIAM the CV Industry is poised to grow at 10 to 12% in FY20. The growth projection is largely based on the expected pre-buying which will kick in during H2 FY20 due to implementation of BS VI norms from April 1, 2020. Other factors fuelling the growth in H2 of Fy20 are a revival of new infrastructure projects post the elections and liquidity improvement in NBFCs in coming months which will ease the funding availability thereby providing a boost to CV sales.

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Autojobs4ublog Team