Domestic commercial vehicle industry sales are expected to cross the peak level of financial year 2019 this ongoing fiscal year with robust demand continuing post-GST rate cuts, aided by the government’s push for infrastructure projects, Tata Motors Ltd MD & CEO Grish Wagh said on Thursday.
Yet, fuel prices and regulatory interventions could have an impact on the growth of the commercial vehicle (CV) industry in the long term, he told reporters in an earnings call.
“The rate at which we are growing, I think it appears that the industry volumes for the entire year are likely to cross the earlier peak of FY19 in absolute numbers,” Wagh said, responding to a query on growth outlook for the sector.
In 2018-19, total commercial vehicles wholesales in the domestic market were at 10,07,311 units as per SIAM data.
“We are likely to cross that at the rate at which we are seeing YoY growth. The amount by which we cross that is something we have to wait for two months and see but at this rate we will certainly cross that,” Wagh asserted.
Pointing out growth drivers for the CV sector, he said GST 2.0 has certainly led to an increase in consumption, which in turn has led to an increase in freights available.
Besides, he said various infrastructure projects have led to growth in quite a few end-use sectors like mining.
“We see the consumption growth continuing at the same rate and also the same trajectory in the infrastructure projects, it should certainly lead to a similar amount of tailwind for the demand in the next year,” Wagh said.
However, he noted that the continued growth in the CV industry, which is cyclical in nature, could be impacted by fuel prices and regulatory interventions.
“Fuel prices are going to be one of the critical factors that one has to look at. We have also seen that regulatory intervention can lead to significant price increases as in the past. So these could be headwinds to some extent,” he added.
However, overall, if the freight continues to grow it should lead to growth in volume, Wagh said.
