The commercial vehicle segment, often considered the barometer of a country’s economic health, is finally experiencing positive momentum. For fiscal 2022, total wholesale sales were 664,009 units, up 26% from the 526,073 units sold in fiscal 2021. While, on the other hand, signs of a resumption of growth are proven, the impact of the increase in diesel prices must be closely monitored.
In March, overall CV sales amounted to 90,747 vehicles, which represents a healthy growth of 20% compared to last March and 57% more than in February 2022. Interestingly, the M&HCV segment experienced average growth of 45% for the year.
For Tata Motors, the country’s largest commercial vehicle maker, overall sales for fiscal 2022 were 322,182 units, up 33% on increased road construction, mining mining and improved infrastructure spending by central and state governments. Growth was led by the SCV Cargo & Pickup segment as well as the M&HCV segment, which grew by 70% and 50% respectively. Sales for the fourth quarter of fiscal 2022 increased 21% to 110,027 sequentially and increased 12% on a year-over-year basis.
Girish Wagh, Chief Executive of Tata Motors, said: “The first signs of recovery have been seen in the otherwise hardest hit CV passenger segment. International activity continued its momentum and increased by around 3% compared to the previous quarter (Q3FY2022) while being 16% higher than the same quarter last year (Q4 FY2021). We are cautiously bullish on domestic demand for MHCV and ILCV while closely monitoring geopolitical developments, fuel inflation and semiconductor shortages.
Ashok Leyland also saw its wholesale sales increase by 27% in fiscal 2022, with sales of 117,312 units compared to 92,714 units for the same period last year. But in terms of monthly sales, for the month of March, while wholesale sales were up 18% year-on-year, the M&HCV Bus segment and the LCV segment were in red.
Mahindra & Mahindra, which has been one of the hardest hit due to the continued shortage of semiconductors, also posted double-digit growth, up 17% with sales of 177,117 units for the year. Growth was driven by LCVs ranging from the 2T segment to the 3.5T segment.
For VECV, the company reported wholesale 47,398 units for fiscal 2022, compared to 35,163 units sold last fiscal year. For the month of March, sales reached 7,929 units, 31% more than the same period last year.
While overall sales for fiscal 2022 were better than the prior fiscal year, the global geopolitical situation, particularly the Russian-Ukrainian conflict, shortage of semiconductors, rising cost of raw materials and other factors are expected to significantly influence sales momentum going forward. With diesel accounting for nearly 45% of running costs, this is also a key controllable item in the new fiscal year.
CV growth on track but diesel could play spoilsport
If, on the other hand, there are definite signs of renewed growth, the impact of rising diesel prices should be watched closely for the CV sector.