The commercial vehicle industry is expected to grow in double-digits this fiscal, driven by favourable demand conditions amid accelerated economic actions, although high fuel prices and increase in interest rates on vehicle loans are headwinds, according to Tata Motors Executive Director Girish Wagh.
The commercial vehicles segment, which saw its peak in 2018-19, with industry volumes of over 10 lakh units, went into a downturn in the following two fiscal years and has begun to pick up momentum from the last financial year.
While it may take longer to reach the highest volumes again, in terms of payload, the industry could reach the previous peak sooner amid rising demand for commercial vehicles (CVs) with higher payloads.
While talking about the overall situation in the CV industry, Wagh said that the industry can be seen coming back. “It may take some more time to reach the previous peak in terms of volume but at the same time, I think in terms of payload, we should reach that earlier, because higher payload vehicles are being sold more today as compared to FY19,” he said.
About the growth rate, he said, double-digit growth is expected. For Tata Motors particularly, the target is to do better than the industry like it did last year. However, some obstacles are expected on the journey. “Needless to say, there are some headwinds. Whether it is fuel price inflation or the interest rates that are going up, which will increase the EMI for the customers.”
Speaking about the impact of rising commodity prices, Wagh said that it has been unprecedented. “Steel price increase, the way it has happened, is mind-boggling. In commercial vehicles, the impact of steel price increase is pretty high because almost 45 per cent of our cost structure gets impacted immediately directly with steel. So the impact has been pretty high,” he said.