Poor run for commercial vehicles sector continues

В рубриках: Automobile | Автор: admin 07.10.2010

Poor Run for Commercial Vehicles Sector Continues

Following a string of government initiatives to boost domestic demand in the auto market, the overall auto sales in India for the month of May jumped into the positive zone. Some prominent car makers and auto part manufacturers, as well as a few two-wheeler manufacturing companies, reported robust sales in May this year as compared to last year. However, despite the good show by some auto companies, the commercial vehicles (CV) industry continued to record muted sales last month.
Sluggish sales of CV manufacturers have put the bottom line of small-scale component vendors supplying auto parts to this segment under tremendous pressure. Sales plunged by 14.8% to 30,800 units for May 2009 as against 36,100 units in the corresponding month last year.
Lean patch far from over
The introduction of twin stimulus packages by the government and slight improvement in the credit situation on the domestic front failed to drive sales for CV manufacturers in the country. Despite steep hike in depreciation allowance from 15%-50% and a 6% reduction in excise duty on the purchase of new trucks, sales in the sector remained subdued.
“Though government efforts to boost demand in the domestic car market are stimulating the demand for two-wheelers and small cars, the situation is still grim for the CV segment. The industry growth continues to be weighed down by the adverse macro-economic environment,” says Rajesh S Kothari, Chairman of Rohan Automotive Equipments, an Ahmedabad-based mid-sized automotive company.
Experts also attribute the recent decline in CV sales volumes to the demand slump in the construction and infrastructure sectors, which are the key markets for the high-tonnage commercial vehicles and mid-range trucks. For the 5 tonne-49-tonne category, sales plunged to 10,919 units in May this year over 18,743 units in the same period last year.
“The lull in the construction and infrastructure sectors – primary consumer markets of CV – has led to slowdown in demand in the segment. However, the situation is likely to improve once these markets pick momentum,” said A Kumar, proprietor of Yash Auto, a small-sized auto parts dealer in Kolkata.
Given the challenging times that the CV industry is witnessing at present, the government needs to introduce tax incentives for manufacturers and offer auto finance to boost demand in the segment. Experts believe that until the market shows signs of revival, it’s going to be a bumpy ride for the small-scale Auto Parts Suppliers pertaining to this sector.
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