What Drove Truck Sales Past Pre-Covid Levels In December

Indian commercial vehicle sales gained further momentum in December as domestic dispatches to dealerships surged, surpassing pre-Covid levels by a big margin.

In December, the commercial vehicle makers stood out, with Tata Motors Ltd., Eicher Motors' commercial vehicle arm VE Commercial Vehicles Ltd., and Ashok Leyland Ltd. reporting strong sales, while deliveries of two-wheelers and four-wheelers either grew moderately or fell.

India's auto industry witnessed divergent growth rates across segments in December, according to Jefferies. Sales of tractors and trucks rose 28–35% year-on-year, while that of two-wheelers and passenger vehicles posted a modest 4-6% growth, it said.

Sales of Tata Motors, Ashok Leyland, and VE Commercial Vehicles rose 5%, 44%, and 51%, respectively, compared with sales in the pre-Covid month of December 2019.

"Improving fleet utilisation, a pickup in road construction projects, and an increase in cement consumption catalysed the recovery in demand for medium and heavy commercial vehicles," Girish Wagh, executive director at Tata Motors, said in a press release. "Commercial vehicles exports, however, remained subdued due to the prevailing economic situation in most overseas markets."

Tata Motors sees a lot of replacement demand in the current quarter, especially for medium and heavy commercial vehicles.

Since touching peak sales in fiscal 2018-19, the commercial vehicle industry has struggled to surpass that level due to a slowdown, and subsequently, Covid significantly reduced economic activity in the country.

Retail sales of commercial vehicles in FY22 were 26% lower than in FY20, according to data from the Federation of Automobile Dealers Associations.

While the medium and heavy truck category has done well to exceed pre-Covid sales year-to-date, the smaller commercial vehicles are yet to get over the Covid blues.

Rising inflation has impacted consumption in the country, leading to muted demand for last-mile delivery vehicles.

However, the December sales report showed dispatches in this category are picking up, even though the recovery may be gradual.

The strong dispatches to dealerships in December point towards expectations of improved demand and an indication of better times in the coming months.