May , 2021
In overall crisis the auto sector has some bright spots also
21:25 pm

Kishore Kumar Biswas


The light commercial vehicle

The auto industry in India has been passing through a huge stress for about two years. The pandemic has brought the auto sector in a dwindling situation. The overall growth of production of the industry is - 17% in the last FY 2020-21. In spite of all the light vehicle production and sale of Ashok Leyland Limited (ALL) is worth mentioning. On the last April 23, Nitin Seth, the Chief Operating Officer of ALL reportedly said, “we started our LCVs (light commercial vehicles) journey 11 years ago. At the time many said it was a wrong move. In the last 11 years, LCV sales have grow to 51% of our total volume. LVCs enables us to successfully hedge the cyclicality of the medium and heavy commercial vehicle business.” What is the sales volume of this vehicle of ALL in the last FY? It is known that in the nine months ended last March ALL sold about 49,000 LVCs. But it is not all about the story. It has been more than the sale volume compared to the previous FY, 2019-20. In 2019-20 the ALL sold 47,000 LVCs. “In the last FY the sale volume grew by 5% while industry contracted 17%. The company gained 2% market share”, said Seth.

Company’s projection for this FY 2021-22

The main reasons behind the increase in sale of LCVs of ALL have been the better performance of E-commerce and FMCG in the pandemic time. As a result the demand for LVCs increased. Moreover, agriculture sector also did well. This also spurred LVC sale in the last FY. According ALL in FY22, the LVC segment would likely to see 30% growth. The company has been planning aggressively to look at international market for LVCs. ALL is interested in five new markets in Africa.

The electric vehicle sale has not increased due to different reasons

One of the reasons of poor demand for auto sector has been the high prices of petroleum oil. But the demand for electric vehicles, a strong substitute for oil driven vehicles, has also not rising in this period. The organization of producers of electric vehicles, Society of Manufacturers of Electrical Vehicles (SMEV) has informed that in the last FY the sale of electric vehicles (of all sorts) has come down by 20% to 2,36,802. But in the previous FY 2019-20 the number of sale of total electric vehicle had been more than 2.95 lakh. According to the data of the SMVE in 2020=21 the sale of two wheelers fell by 6% to 1,43,837. The fall of sale of three wheelers was bigger. In FY 2019-20 it was 1,40, 683 and it came down to only 88,378 (only registered vehicles) in 2020-21.

But the picture is different for four wheelers. Sale of four wheelers was increased by 53% to 4588. Sohinder Gill, DG, SMVE reportedly said that they had expected the sale of electric vehicles would rise but due to changed scenario reality had changed. But he also said that customers were being more interested in high quality lithium ion battery. The demand for electric vehicles would increase when normalcy would be restored. At the same time Gill pointed out that financing for electric vehicles had been a problem. All the banks were not interested in disbursing loan for the customers of this item generously. At the same time with the better infrastructure like installation of more charging points the demand electric vehicles would rise, according to Gill.

Demand for second hand car increased, mostly among the women

In the pandemic phase the sale of small cars and two wheelers dropped. But later quite a large number of persons chose to use small cars or two wheelers to avoid public transports. Along with the increased sale of new the demand for used vehicles was also on the rise. A survey observes that the first time vehicles purchasers were more interested in second hand vehicles and its share has been 65%. In this segment the number of women purchasers is greater in 2020-21 which has been double compared to the previous FY’s. It is reported that a survey of the organisations of second hand cars dealers, SPINY, observed that in 2019 the share of second hand vehicles sale was 10% but it has increased to 20% in the last FY 2020-21. Mostly the women aged between 28 to 35 years are interested in this segment. The market for second hand cars is biggest in Delhi and its nearby areas. Market is also big in Hyderabad, Bangalore and Pune, according to the survey.

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