CVs sales weakness continues with sales down for the sixth month straight

The commercial vehicle industry continued to manifest its troubles in November 2019 sales. This industry has been among the worst hit due to the economic slowdown.

Tractor sales were hit in recent times, owing to multiple triggers, such as extended monsoon, economic slowdown, liquidity crunch, elections in few agri-oriented states, etc. The largest tractor players, such as Escorts, M&M (holds 22 per cent of total segment revenues), and VST tillers, have seen nearly 10 per cent decline in tractor sales on YTD basis by the end of November 2019.

The commercial vehicle segment also further registered a decline in sales figures according to latest published data by these companies. The industry major Ashok Leyland reported a 25 per cent decline in sales for November 2019 compared to the same month last year. This is sixth straight YoY fall in sales for the company. It has already registered a fall as much as 57 per cent YoY during September this year. Another CV major, Tata Motors, also reported 17 per cent decline in total sales. The sale number of Tata motor was aided by a decline in M&HCV and Passenger Carriers, which dropped by 38 per cent and 35 per cent, respectively.

The stock prices of this sector have already seen steep declines over the past one year. Once a multi bagger stock, Force Motors has fallen as much as 40 per cent since last December. While other majors, such as Ashok Leyland and Escorts, had given negative 28 per cent and 11 per cent, respectively, during the same period.

Looking at the current scenario, the recovery in these stock may just be imagination and any further decline can further worsen the situation. Though government initiative, such as tax cuts and scrappage policy, can be expected to make things easier for the sector in future.