Commercial vehicles sales dropped by 20%

Commercial vehicles sales dropped by 20%

The sale of commercial vehicles in India is reduced by 20.13% in the second quarter of the financial year 2020. The sale for this quarter is 1.33 lakh units. For last year in the second quarter, the no. was 1.67 lakh units.
The sale of the commercial vehicle plays an essential role in deciding the economic activities of the country.
The sale of other vehicle has seen growth compared to last year, car sales increased by 28.92%. The other vehicles like utility vehicles, two-wheelers, and three-wheeler sale increased by 24.5%, 11.64%, and 72% respectively.

What are commercial vehicles?

Any kind of motor vehicle used for carrying goods or paying passengers is a commercial vehicle. A ‘commercial motor vehicle’ is defined by the European Union as any motorized road vehicle equipped for and capable of transporting, whether for payment or not, by its form of construction and equipment:

1.more than nine persons, including the driver;

2. goods and ‘standard fuel tanks.

Reason for the drop in sales

The liquidity stress of the NBFC has played a role in the decline in vehicle sales across segments, as NBFCs are important lenders in tier II and smaller cities. Weak farm sentiment, the downturn in the rural economy, and predictions of a worse than normal monsoon this year have further hurt tractor sales. This comes in the midst of the third crop production advance estimates suggesting a slide in rabi production. So far, Kharif’s seeding has remained slow.

The situation is unlikely to change as soon as India’s economic growth is yet to pick up due to less business activity and consumer spending, industry representatives have said. Business revenues are subject to pressure due, among other factors, to axle load requirements, liquidity crunch, goods and services tax (GST), BS-IV inventory correction, and economic slowdown. Truck sales have been hit by improvements in the axle load requirements introduced by the government. Industry officials said that after the increased axle load became successful, a substantial decline in commercial vehicle sales has been evident. In order to revive demand, the industry has called for a scrappage policy and other policy support initiatives.

In total M&HCV sales, Ashok Leyland Ltd, the second-largest truck and bus manufacturer, also announced a 7.9 percent decrease in sales. This is not abrupt. In May, Tata Motors’ sales hit a roadblock. It has not since recovered. Ashok Leyland sales have been falling, too. One might argue that before dropping, the segment clocked heady growth for almost two years and, thus, the elevated base threatened growth prospects.

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