IN THE FIRST PART OF OUR MONTHLY SALES ANALYSIS, WE LOOKED AT PASSENGER VEHICLE DISPATCHES. IN THE SECOND PART, WE LOOK AT THE PERFORMANCE OF THE COMMERCIAL VEHICLES SECTOR.
The biggest story in Commercial vehicles segment was the strong performance of the Heavy Vehicles segment. In our recent conversations with fleet operators, particularly small ones, many had commented that the last two years have been a struggle for them. The fall in diesel prices has brought some relief and many are recuperating from the damage of the last few quarters. That is one of the reasons why the small fleet operators are yet to jump into the Commercial Vehicle buying bandwagon. That is also the reason why haulage rates have not moved downwards in parallel to the fall in diesel prices.
HCV – RIGID REAR AXLES
The Heavy Commercial Vehicles with Rigid Rear Axles segment saw a near 59% jump in dispatches. The growth is an indication that fleet owners are finally returning to the market to replace their raging heavy trucks. The segment is also benefitting from the strong demand from restarted mega infrastructure projects.
Dispatch volume gains were l;head by Ashok Leyland, which saw a 83% jump in dispatch volumes over previous January. However, dispatches were still lower than January 2012 dispatch volumes.
Also delivering strong statistical growth was Mahindra which saw a 77% improvement in dispatches from a very small base. Apart from these two manufacturers, everyone else grew slower than the segment average.
Tata Motors had an impressive 54% growth in dispatches, even though it was slower than the industry average.
The only player to really disappoint was AMW which saw a decline in dispatches in the segment.
Overall, the segment dispatches were the best over the last three years but still lower than January 2010, 2011 & 2012 volumes. The gap from the peak indicates that the recovery has just started and the market has a considerable distance to go.
HCVs – ARTICULATED REAR AXLES – TRAILERS
The Heavy Trucks with Articulated Rear Axles segment grew at an even faster pace. The overall segment improved by 166% in dispatch volumes from January 2014. The segment has been at the forefront of revival of the M&HCV market for sometime and a heavy volume gain indicates that large fleet operators are growing in confidence about the economy. Most of the volumes are made up by Tata and Ashok Leyland and it is difficult to pick the winner. Tata improved its volumes by 196% while Ashok Leyland’s dispatches jumped 187%.
Overall, this was the best January ever for the segment. The significant gains in the segment indicate the changing characteristics of road logistics in the country.
MEDIUM COMMERCIAL VEHICLES
In comparison, MCVs are still on shaky grounds. The segment dispatches were up by a modest 5.7%, driven mostly by the improvements by smaller players – VECV and SML Isuzu. VECV volumes were up nearly 17% while SML Isuzu managed a 31% jump. In comparison, Tata managed a 3.8% jump while Ashok Leyland barely managed their volumes.
Overall, MCV volumes were the lowest in the last six years, not counting January 2014. The segment is still a few quarters away from solid recovery as small fleet operators are not yet feeling confident.
The Buses segment is a strange animal as it often depends on government dole spending on urban infrastructure. This is a strange system where (mostly) loss-making city transport corporations do not account for eventual machine replacement in their P&L accounts. The onus on replacement is on fresh dole arriving from the Central / State governments, something that cannot be forecasted accurately.
The earlier government had a scheme called Jawahar Lal Nehru National Urban Renewal Mission (JNNURM), which ended in march 2014. However, order fulfilment is still going on and dispatch numbers indicated a 12.8% growth in January. At 3000 units, dispatches were the best in the last three years, but nowhere close to dispatches in January 2010, 2011 and 2012.
Market leader Tata Motors saw a 12.4% improvement in dispatches while Ashok Leyland managed 6.5% growth. However, the best numbers came from VECV and SML Isuzu, the former growing by nearly 51% and the latter by 16.3%, both on much smaller bases.
SMALL COMMERCIAL VEHICLES
This is one segment that went down later than the other Commercial vehicle segments. The bounce back is still a few quarters away. January 2015 dispatches were 12.5% lower than previous year with market leader Tata Motors witnessing a 16.8% dip in dispatches. Mahindra dispatches were down 12%, Piaggio by 13.6% and Force Motor dispatches declined by 72%.
The only ones in positive zone were Ashok Leyland with a 8.8% jump in dispatches and newcomer Isuzu, who volumes are still in the insignificant zone.
LIGHT COMMERCIAL VEHICLES
If there is a segment declining faster than SCVs, it is Light Commercial vehicles (LCVs). January was pretty bad as dispatches fell by 52% over previous year. At 2424 units, this was the worst January in the last six years for the segment. All relevant players were deep in the red with market leader Tata Motors suffering 38.5% decline in dispatches. Mahindra was down 52.6%, VECV down 26.4%, while SML Isuzu was down 17.1% over previous year.
The continued declines in the LCV and SCV segments are an indicator that not all is well with the rural and semi-urban economy yet. The numbers indicate that while the sentiment may have changed, the macros haven’t.