Green shoots of revival emerged after August sales figures for medium and heavy commercial goods carriers (M&HCV) showed their first positive growth since June 2008. The growth, however, is still a small 0.9 per cent (just 6,210 vehicles) over last August and is mainly driven by higher government spending.
"This is the first month for the year in which sales of large commercial vehicles have been in positive territory. The primary reason being government spending on infrastructure, which has a direct correlation with sales of large trucks," said Sugato Sen, senior director of Society of Indian Automobile Manufacturers which released the auto sales figures today.
Overall auto sales continued its uptrend, growing 24.33 per cent over August last year -- the highest for the current financial year. According to the data, 1,008,702 units were sold last month. In July, vehicle sales grew 20.76 per cent.
The positive growth in the M&HCV last month was made possible by truck manufacturers like Tata Motors and Eicher Motors seeing a pick-up in demand for large trucks since June this year. Ashok Leyland posted its first positive sales growth in August, albeit by less than a per cent.
"The sales growth in the M&HCV segment does not surprise us. Sustained GDP growth over the last few months, timely payment of vehicle EMIs by large truckers making them eligible for new vehicle financing, elements of the government's stimulus package like the 50 per cent depreciation rates on new truck purchases this year and the low base effect of last year have all contributed to positive sales in this segment last month," said S Ramnath, vice- president (research) of IDFC SSKI Securities.
Ramnath expects sales of large trucks to continue to grow in October through December, since sales of M&HCVs dipped over 50 per cent in the same period last year.
"There will also be additional sales rush by truck operators at the beginning of next year to complete their purchases of new trucks before the new Euro-4 emission norms come into effect in April 2010. This will also contribute to additional sales," says R Seshasayee, managing director of Ashok Leyland.
However, sales of buses dipped by 7 per cent, following a trend of the past few months.
Industry executives said the government's procurement of around 15,000 buses under an urban renewal scheme has not been sufficient to revive this segment.
"Out of the order for 10,000 buses placed by the different state transport corporations, only around 250 buses have been delivered so far. There is confusion in the order execution, since most of these buses have specifications like low floor facility which cannot be executed readily in our assembly lines. Besides payments have not been received for the buses delivered so far," says an industry executive.
The overall commercial vehicle market grew 18.48 per cent over August last year, driven mainly by a 30 per cent growth in light commercial vehicles.
