Freight carriers M&HCV and LCV deliver cargo in Q1 FY2023

One of the encouraging takeaways from the industry’s wholesale figures for the first quarter of fiscal 2023, released by apex body SIAM on July 13, was the revival in demand for India’s utility vehicles (CV). Sales and demand for the CV industry are on a cyclical trend and after four years of growth (from fiscal 2016 to fiscal 2019), fiscal 2020 saw the downturn begin with declining sales by 29% to 717,593 units.

But little did the industry know that the worst would follow at the start of fiscal 2021 when the Covid-19 pandemic enveloped the world and India. April 2020 turned out to be a unique month in the annals of India Auto Inc with zero production and zero sales. Heavily impacted by Covid-induced nationwide shutdowns, demand slipped to 568,559 units in fiscal 2021, down 20.77% year-on-year, as transportation, other than for essential goods, was negligible for almost half of the year.

A close look at resume industry sales over a 10-year period reveals five years of decline and five of growth. After the 716,566 hp sold for fiscal year 2022, the latest wholesale sales for the first quarter of fiscal year 2023 indicate a return of demand to the pre-Covid days.

Wholesale sales figures in the first quarter (April-June 2022) of 224,512 units (112%) and the strong performance of the M&HCV segment (75,685 units / 159%) and the LCV segment (148,827 units / 94%) reveal that CV customers are back in buying mode as they replace older vehicles and also invest in future business operations.

Combined freight carrier sales (M&HCV: 67,978 units and LCV: 137,237 units) of 205,215 units in the first quarter of fiscal 2023 constitute 91% of total CV sales of 224,512, with the remaining 9% being the 19,297 buses in the M&HCV and LCV segments.

M&HCV: movers and shakers
Medium and heavy-duty vehicles, which are known to be the barometer of the economy, reflect improving market sentiment. There has been a gradual recovery in demand for M&HCV, with carriers reporting improved fleet utilization levels, the multiplier effect of large government spending on road construction projects across the country and also increased consumption of cement for infrastructure projects. This is reflected in the sharp increase in demand for tippers and semi-trailers.

According to FY2023 Q1 CV industry wholesale data released by SIAM on July 13, demand for M&HCV increased substantially by 142% year-on-year to 67,978 units. While Tata Motors topped the list with 35,241 units, followed by Ashok Leyland (21,147), it was VE Commercial Vehicles that recorded maximum growth with 9,355 units (210%), but on a lower base than both. M&HCV market leaders.

Utility vehicles: last mile champions
Light commercial vehicle (LCV) industry freight carrier sales in the first quarter of fiscal 2023 are double those of M&HCV freight carriers. The massive boom in the e-commerce industry, which is witnessing an increase in online bookings for dozens of products from both urban India and Tier 1-2-3 cities, is driving steady growth. While large LCVs handle logistics deliveries across the country, small LCVs like vans and mini-trucks provide door-to-door deliveries. Reason why Mahindra & Mahindra is the boss of this cargo carrier segment.

M&M sold a total of 57,509 units, 6,684 units more than Tata Motors. Its hugely popular line of Bolero pickup trucks accounts for 47,462 units or 82% of the company’s LCV cargo carrier sales and 34% of total industry sales. Ashok Leyland’s Dost was purchased by 13,946 customers while the Toyotra Hilus, which has just entered the market, sold 433 units.

In the mini-truck segment, the Tata Ace reigns supreme with 29,655 units, up 114% (Q1 FY2022: 27,124), while the Maruti Super Carry also saw demand with 10,817 units (up 166%, Q1 FY2022: 4056). Mahindra minitrucks accounted for 9,567 units, up 58% (Q1 FY2022: 6,042).

Growth prospects: cautious optimism
The fortunes of the freight carrier market are closely aligned with the country’s GDP and, given how things are going and the improving macroeconomic scenario, the positive sentiment will be reflected in the overall M&HCV sales numbers. and LCV in the months and quarters to come.

Massive investment and emphasis on road construction activity across India, resurgence in mining operations and expected growth in agriculture will drive the demand for M&HCV. The rise of e-commerce has led to strong vehicle purchases from logistics companies, while small utility vehicles such as mini-trucks and vans are expected to continue to see sustained demand, with last-mile delivery momentum picking up. firmly rooted in the Indian market. .

However, there will be challenges to growth. For example, the The Delhi government banned the entry of M&HCV from 1 November 2022 to 28 February 2023 to curb pollution. There’s also fuel expenses, which are one of the highest operating expenses for CV fleets. The cost of diesel, currently priced at Rs 89.62 per liter in Delhi, Rs 94.24 in Chennai, Rs 94.27 in Mumbai and Rs 92.76 in Kolkata. Any reduction in diesel prices will offer a lot of relief to CV operators. There is also the vehicle price factor to consider, with raw material price inflation leading to higher input costs for OEMs.

Overall, at this point in fiscal 2023, when the second quarter has kicked off, the market scenario looks positive and OEMs are cautiously optimistic about growth.

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