Summary
In any economy the road
transport accounts for a major share in the overall transition of
goods and people. In India, road transport has been on the uptrend
with the total goods traffic on roads increasing from 13% in FY51
to 53% in FY92 and the total passenger traffic going up by 28% from
FY51 (i.e. passenger-km) to 80% in FY92.
The Commercial Vehicle
(CV) sector can be broadly classified as Light Commercial Vehicles
(LCVs) and Medium & Heavy Commercial Vehicles (M&HCVs)
based on the Gross Vehicle Weight (GVW), which constitute 41% and
58% of the total CV sales respectively. In the M&HCV segment,
trucks command a dominant share of 70%.
The M&HCV segment
has registered a variation in sales volumes in the past few years.
It recorded peak sales of 155,696 units in FY97. In FY98 and FY99
the economic recession affected the sales which dropped by 38.4% to
95,854 units and another 16% to 80,528 units respectively. The
revival of economy in FY2000 led to the segment bounce back by
39.4% recording sales of 112,311 units. In FY2001, however the
sales again dropped by 21.4% to 88,210 units.
LCV sales had increased
from 47,872 units in FY90 to 84,855 units in FY97 showing a CAGR of
8.5%. Along with the M&HCV sales, the LCV segment followed suit
suffering a continuous fall in sales during FY98 and FY99. However
the sales recovered during FY2000 recording a 10.6% increase to
61,213 units from FY99 levels. In FY2001 the LCV segment recorded a
marginal increase of 4.3% to 63,869 units.
The major players in
the Commercial Vehicle Segment are Ashok Leyland Ltd, Hindustan
Motors Ltd, Telco, Volvo India Pvt.Ltd, Bajaj Tempo Ltd, Eicher
Motors Ltd, Mahindra & Mahindra Ltd, Swaraj Mazda Ltd with
almost half of the M&HCV players also being in the LCV
segment.
The infrastructure
development, planning and outlay directly contribute to the sales
and the sophistication of technology used in the majority of
commercial vehicles. The sales volumes are also subject to
fluctuations in several other factors such as government policies,
fuel prices, better monsoons, rural incomes and replacement demand
to name a few. The companies in the CV segment will be witnessing
improved performances in the near future in case of the above
factors remaining favorable. The investors with long-term
perspective should consider investing in this sector. At this stage
downside risk is limited, while upside potential is huge. Given the
competitive positioning of the major players in the segment and the
fact that there is virtually no threat from imports, the majors
(Telco, ALL) will stand to reap windfall gains once sector fortunes
revive on the back of economic growth.
