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Commercial vehicle sales outlook strong, but far off from pre-Covid peak

Demand for trucks and buses across segments remains strong and is expected to increase ahead of the implementation of stricter emission norms next month, but overall sales of such vehicles this fiscal will fall short of the 2018-19 peak, industry estimates show.

With the exception of a few sub-segments within the bus and truck market, majority of the segments are likely to end 2022-23 lower as compared to FY19, said Vinod Aggarwal, president of industry body Society of Indian Automobile Manufacturers (SIAM).

A total of 463,000 trucks and buses are likely to be dispatched in domestic and export market this fiscal against 557,000 units in FY19, he said. Shruti Saboo, associate director, corporates, at India Ratings Research, said commercial vehicle (CV) volume sales are likely to reach pre-Covid levels on a sustained basis only by the end of FY24.

A pick-up in infrastructure and construction coupled with increased economic activities have been fuelling truck sales across segments with the exception of the light commercial vehicles that has seen some softening in demand. Improved fleet utilisation and higher replacement demand coming in from the scrappage policy likely to be implemented from April 1, 2023, have been pushing volumes, experts said.

In addition to the fiscal year-end phenomena, which typically leads to higher purchase in March as transporters buy to claim the depreciation benefit, this time around, pre-buying ahead of the change in emission norms will also give a boost to truck sales, they said.

“Prices of trucks are likely to go up in mid-single digits as the second phase of BS-VI norms take effect from April 1,” Saboo said.

This will be on top of a price hike of over 10% that the CV manufacturers have taken in the last one year. This could lead to some pre-buying as the consumers in the segment are more price sensitive, she pointed out. Tata Motors has witnessed a pre-buy trend in truck sales prior to the implementation of the new emission norms, analysts said.

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