While commercial vehicle (CV) sales hit a slow phase after a solid start in financial year 2018-19, Tata Motors has managed to register double-digit sales growth during the year. Arshad Khan caught up with Tata’s vice president of sales and marketing for CVs — R T Wasan — for a chat on what is impacting the segment, what is driving LCV sales and the recovery in sales. Excerpts:
How do you view your performance in March?
CV business sales in March 2019 grew by 4 per cent at 50,917 units compared to 49,174 units sold last year, gaining 1.5 per cent market share for the month. For FY 18-19, Tata Motors (TML) sales recorded a growth of 17 per cent...
During the year, we outpaced the industry’s growth in three out of four CV segments – medium and heavy CVs, intermediate and light CV and in small CV/pickups.
The new product launches with the revised axle load norms introduced in MHCV trucks and tippers along with the new launches in ICVs like the Ultra range, the Ace Gold, and Yodha 4x4 pickups have all gained significant volumes and helped improve market share.
What caused the disruption in sales during the second half of the year, especially in the MHCV segment?
The MHCV cargo segment growth tapered off and went on the decline in H2... This was majorly impacted due to the lagged effect of implementation of revised axle load norms. This increased the freight carrying capacity of heavy trucks by around 20 per cent, but the freight demand did not increase in tandem. This led to surplus freight carrying capacity, leading to a drop in the purchase of new trucks.
Apart from this, weak consumer sentiments driven by liquidity crunch in the market, higher interest rates and rising fuel costs led to operators postponing their purchase. Small operators’ profitability had also been under stress due to reduced freight rates because of the benefits passed on by large operators from GST input credit. Furthermore, overall demand post the festival period stayed muted.
By when do you expect a revival in demand for M&HCVs?
The industry is likely to see a recovery as we move towards the latter part of the year with pre-buying ahead of the transition into the BSVI regime expected to give some growth. Liquidity has started to ease and fuel prices have also moderated with the reduction in global crude oil prices.
Some of the MHCV sub-segment growth will continue to be aided by higher budgetary allocation towards infrastructure, affordable housing and irrigation projects. Resumption of mining activities in select states will also lead to an increase in demand for tippers. E-commerce and third party logistics providers are driving demand for containers and reefers.
Light CVs continue to see good demand...
The liquidity impact has been moderate in the ILCV and SCV/pickup segments except for the marginal increase in the borrowing rates for customers.
The growth in these segments has been led by the e-commerce sector, increased discretionary consumption and new product launches. Private Final Consumption Expenditure (PFCE) has also been a lead indicator of ILCV and SCV demand. The recently launched Tata Ultra range of ILCVs and the Ace Gold has gained significant traction and has contributed to volume growth.
What is TML planning for FY2019-20?
We will continue to introduce and launch new products to meet requirements and which will give us the competitive edge in the marketplace, with a superior total cost of operations and higher productivity. In addition, we are continuously expanding our network of sales, service and parts touchpoints to cater to growing customer requirements.
In FY19, TML has added 275+ new Sales & Service touch points and we have more than 3750+ customer touch points across the country today.