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The prolonged slowdown in the commercial vehicle (CV) segment may last longer than what was previously contemplated, believes the head of India's largest CV manufacturer.

Speaking at the ACMA Tech Summit in Pune on November 25, Girish Wagh, President of Commercial Vehicle Business Unit at Tata Motors, indicated that industry stakeholders earlier anticipated the downturn to start in 2020 when BS VI emission norms kick in. This is mainly because the upgraded vehicle emission norms increase the input costs of the vehicles, thereby resulting in a higher sticker price for the end consumer. Also, it has now been realized that the current slowdown is both cyclical as well as non-cyclical. “The CV industry is closely linked with the Indian economy, and scaling back to an earlier peak could take up to five years,” said Wagh.

According to Wagh, an industry slowdown usually lasts between 24-30 months and some have a shorter 12-month stint. Given that overall CV sales – at 442,253 units in the April-October 2019 period are down 23% year on year – the industry remains stuck in a growth-sapping stage. Even after the recovery happens, which is likely to ne next Diwali, it may take the industry a good 2-5 years after that to reach the peak volumes it had recorded in previous years. In FY2018, CV OEMs had sold a total of 1,007,319 units (17.55%), a new high that came about five years after attaining peak sales of 809,499 units in FY2012.

Commenting on a perceived uptick in demand, Wagh said that the government has taken some measures to pep up demand which has started having some impact. However, he added, “When I say green shoots, I am cautious as it is for demand drivers and not actual demand within CVs. We will be able to bring the demand back in the system once we absorb the shock, bring liquidity back in the system and set up the required infrastructure,” Wagh concluded.

Stressing the need to accelerate exports amidst the slowdown as a measure to buffer the domestic market downturn, Wagh said that the increased regulation in the country’s automotive industry has increased harmonization globally. “Therefore, one should start focusing on exports because the capabilities are going up,” he added, emphasizing that industry should look at cost optimization for one full cycle which may extend to up to seven years.

Source: Autocar Professional