industry

Commercial vehicle sales picking up, likely to regain peak, says VE Commercial Vehicles MD


NEW DELHI: Demand for commercial vehicles – a key indicator of economic activity – has started picking up and the industry is expected to get back on to the growth path in the next financial year, Vinod Aggarwal, managing director of VE Commercial Vehicles, told ET.

Sales of medium and heavy commercial vehicles in the country have declined 58% year on year between April and November, he said.

“However, demand has improved over the past two months as the trucking industry is picking up,” Aggarwal said. “Going forward, with economic activity expected to better, sentiments are positive. With the possibility of (Covid-19) vaccine, the next financial year should bode much better for industry.”

Replacement demand for medium and heavy commercial vehicles, which had petered out the last three years, is expected to gain pace as economic activity increases and support growth in the segment.

VE Commercial Vehicles, a joint venture between Volvo Group and Eicher Motors, is a small but significant player with about 5% share in the Indian commercial vehicle market, behind market leader Tata Motors, Mahindra & Mahindra and Ashok Leyland.

While overall, sales of medium and heavy commercial vehicles are still likely to decline by 40% in 2020-21, the industry is expected to grow thereafter and regain peak sales of 390,732 units registered in FY19 next fiscal year.

Sales of medium and heavy commercial vehicles had dropped by 42.47% to 224,806 units last fiscal.

Aggarwal said the excess capacity which had been released in the marked on account of a change in axle load norms has been absorbed. And, even though cost of acquisition of commercial vehicles have increased due to the implementation of BSVI emission norms, new trucks deliver higher productivity, and have lower overall cost of ownership, which would make them attractive for buyers, he said.

VE Commercial Vehicles has invested Rs 350 crore in commissioning a new plant in Bhopal on Saturday to cash in on demand once the market revives. The company has earmarked an additional Rs 150 crore to set up a paint shop at the facility. The new unit will take the company’s total investment in Madhya Pradesh to over Rs 5,000 crore.

“Together with our facilities in Pithampur, we will now have the capacity to produce 130,000 units per annum,” Aggarwal said. “This puts us in a very good position because once the market improves, we will be able to take advantage of this investment and cash in on demand.”

The new manufacturing unit has initial installed capacity to roll out 40,000 units per annum.

With the commissioning of the new facility, Aggarwal said the company is at the close of an investment cycle. It will continue to invest Rs 300-400 crore every year as capex going forward, he said.





READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.