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May 17, 2001
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Money > Business Headlines > Report May 17, 2001 |
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Drop in LCV sales haunt auto firmsSwati Prasad After medium and heavy commercial vehicles, it is the drop in sales of light commercial vehicles during April 2001 that is raising the hackles of the automobile industry. During the last financial year, when sales of MCVs and HCVs dropped by a whopping 21 per cent, LCVs actually grew by 4.5 per cent. But this year, sales figures of Tata Engineering for April have shown a 33.6 per cent drop in sales for LCVs. Tata Engineering is the largest player in the LCV segment with a market share of 63 per cent posted in the financial year 2000-01. Even the sales of Eicher Motors Ltd (the second largest player in the segment) were flat, according to Rakesh Kalra, managing director of Eicher Motors Ltd. The company sold 401 vehicles last month against 391 vehicles sold in April last year. But April 2001 figures also include some units of Eicher's new 10.5 tonne MCV. "LCV sales have hit a plateau," says A J Sandil, executive director of Ashok Leyland Limited. According to Sandil, "Sales of LCVs depend on the rate of urbanisation and the propensity to spend." At present, sectors such as white goods, pharmaceuticals, cosmetics are down, therefore LCV sales are low. "Low freight rates, a hike in diesel prices and low return on investment in the case of LCVs may be another reason," says Sandil, adding that it's still early days to jump to a conclusion. According to an executive of Tata Engineering, the drop in LCV sales in April was due to the "overall slowdown in the economy". Kalra, however, is of the view that in April 2000, buyers had advanced their purchases due to the rationalisation of sales taxes. Besides, Kalra feels that last month, buyers may have postponed their purchases due to the assembly elections. "Overall, all players in the LCV segment are expecting a flat growth," adds Kalra. According to him, even the depreciation benefit granted in the budget to commercial vehicles will not help. "Depreciation benefits work in a scenario where companies are posting profits. But today, due to lesser movement of cargo, bottomlines of most transport companies are under pressure," Kalra adds. Powered by YOU MAY ALSO WANT TO READ:
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