CV sales surge 11% YOY in Nov on reopening bounce

Pickup in economic activities, low base from last year help numbers

Sales of commercial vehicles (CVS) by most manufacturers rose in the domestic market in November on account of a pickup in economic activities and the low base of last year.

Cumulative sales of the top CV makers rose 11 per cent to 59,872 units over those in the same period a year ago.

“Had it not been for the shortage of CNG kits and semiconductors, overall sales would have expanded more,” said Vinod Aggarwal, managing director and chief executive, Eicher Motors.

Half the demand in the 5-16tonne segment has now shifted to CNG. This caught the kit makers unawares, Aggarwal said.

Commenting on the recent cut in diesel prices and its impact on transporters’ viability and new truck purchases, he said the replacement demand had not been very strong.

According to him, the transporters’ viability, particularly the ones that own small fleets, continues to be under pressure despite a diesel price cut.

Diesel prices jumped 50 per cent in the past 18 months. Fuel accounts for 60 per cent of the ownership costs for transporters, so the freight rates have to go up by at least 30 per cent to compensate for increase in the fuel prices, said Aggarwal.

“While the Centre and some state governments have cut taxes on diesel, there was a decline in the movement of freight in November because of slower industrial activity. The quantum of freight moved was flat to negative a month after the pre-festive buzz in October,” wrote Hemal Thakkar, director, CRISIL (Research), in “Freight Signs”, released by CRISIL Research on Friday. The CRISIL PAN India freight index fell to 114 in November from 122 in October.

But transporters are not complaining.

“The diesel price cut has come as a huge relief. We are now able to breathe. We were otherwise struggling to make both ends meet. This was a long-pending demand,” said Balmalkit Singh, proprietor, Bal Roadlines.

According to S P Singh, senior fellow at the Indian Foundation of Transport Research and Training (IFTRT), freight rates on key trunk routes went up by 5-6 per cent month-on-month in November on the back of robust factory output.

“November has been the best in five years,” he said. This is in contrast to a drop in rates one had expected after the diesel price cut but good cargo volumes ensured that the price remained buoyant.