Commercial Vehicle Sales Pick Up: October 2016

Sales of medium and heavy trucks picked up in October after three straight months of decline, suggesting an improvement in the macroeconomic scenario as demand in the segment is seen as a barometer of economic activity.
Sales of these trucks with payload capacity of at least 7.5 tonnes are estimated to have increased 12.7% from a year earlier to 23,874 in the past month. Stable freight rates and increased load availability have helped push sales last month, with some replacement demand also kicking in, manufacturers said.
These, coupled with some pre-buying before the BS-IV emission rules come into force in April 2017, as well as government programmes drove sales. Increased construction activity due to the government's focus on infrastructure development aided growth in the tipper space and this trend is likely to continue, said industry executives.
In the CV segment, Tata Motors posted its highest monthly volumes this year -October sales, including of light vehicles, increased 15% to 30,169 units. While sales of light commercial vehicles went up 21%, volume of medium and heavy vehicles rose 9%. The upward trend was seen also in the numbers at Ashok Leyland, where sales of commercial vehicles rose 28% to 12,533 units. Sales of Eicher-branded trucks and buses increased 11.2% to 3,854 units in the domestic market.
The growth in medium and heavy CV (MHCV) sales in October has come after three consecutive months of decline. MHCVs sales dropped 7.6% in July and 10.8% in August. In September, the decline was sharper at 20.6%, dragging down overall sales in the commercial vehicle segment to the red at 61,621 units.
A lot would depend on the GST rates that would come into effect in April. On Thursday, the government unveiled a four-tier framework, with rates ranging from 5-28%, but there isn't yet clarity on product-wise tax.

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