The demonetisation impact which is expected to go off and the BS4IV pre-buy is expected to start in Q4. This is expected to bring a tremendous boost in sales of commercial vehicles, as there will be an incremental prices upto Rs.1,00000/- for the new BS4 products that will be launched from April 2017. The artificial boost say around 15 to 18% is expected for last quarter. Technically, majority of BS3 vehicles are with mechanical engines and hence there is less of electronics. BS4 also calls for additional engine and exhaust related chagnes and hence the price increment. While buying newer BS4 trucks, Customers will also take time getting used to the electronic engine.
The not-so-good news is that this bullish sales may lead a greater than sluggish buying pattern in the first quarter or even it may spill upto second quarter of the 2017-18 too. This means manufacturers are already bracing themselves for a hard drive. We are hopeful that things will look up in October-March 2018 when the expected benefits of demonetisation will hopefully start playing out in the economy. This would leave the Centre with more money to spend on infrastructure while banks will also lower interest rates to incentivise investments.
Further down the line, if things do go according to the planned script, M & HCVs will have a good run for the next two years, especially during 2019-20 when there will be brisk buying, thanks to BS VI norms which will come into effect from April 1, 2020. This is one of the biggest challenges for policymakers as the new emission norms will completely bypass BS V while moving from (BS) IV to VI. Not only will vehicles across the board become very expensive but there are fears of cleaner fuel not being available across every nook and corner of India.
Tata Motors as market leader with a share of over 55 per cent in M & HCV, expects sales of medium and heavy commercial vehicles (M & HCVs) to be brisk in the last quarter of this fiscal despite economic growth taking a hit after the Centre’s move to demonetise high value currency. The company has found an unexpected ally in the form of Bharat Stage IV emission norms which kick in from April 1, 2017. With extra technology fitments, new vehicles will end up being more expensive which will prompt fleet operators to queue up for the existing affordable range instead.
Ashok Leyland’s total sales were up three per cent at 86,714 units during April to November. The medium and heavy commercial vehicles segment saw sales up by two per cent during the same period at 65,871 units, from 64,810 units, while sales of the light commercial vehicles segment grew seven per cent to 20,843 units, from 19499 units during the same period of previous year. The uncertainties the market faced earlier before the fixation of the goods and services (GST) tax rates have been settled, with the clarification that there is no major difference in rates due to GST implementation.