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CV volumes: On the brink of a turnaround?
Sep 11, 2014


The last couple of years have been quite challenging for the commercial vehicles (CV) sector. Indeed, among all segments of the auto industry, this segment has been the worst performing of the lot. Since the fortunes of this segment are very closely linked to that of the economy, considerable slowdown in GDP growth hampered CV volumes as well. It did not help that the erstwhile UPA government did nothing about reviving the industrial sector.

But the month of August 2014 has been different. Indeed, medium & heavy CVs (MHCVs) posted a strong 20% growth led by increased mining activity and freight movement and also because last year's base was very low. Does this mean that the worst for the CV sector is over? Not necessarily. Because volumes of light commercial vehicles (LCVs) and buses are still down and have weighed heavy on the entire CV sector. The bus segment at least is expected to see a revival as both Tata Motors and Ashok Leyland have won orders from various states. MHCV growth is also likely to continue as economic activity picks up. How LCVs pan out remains to be seen. But overall, it does seem that the outlook for CV space is much better than what it was last fiscal.

Data Source: Financialexpress.com

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1 Responses to "CV volumes: On the brink of a turnaround?"

KD

Sep 12, 2014

In any industry the operating margin gravitates towards long term average. This principle is called mean reversion. Therefore, I think, we will see revival in CV demand in 8-10 months.

In fact, in 2011 we were not adding a single vehicle to our fleet. There was heated debate about expanding business. Many of our employees left and started their own logistics business. They were saying that I do not have work experience. Moreover, they said that my knowledge is theoretical and I keep on dreaming. All these people, who claim that they have got more than 25 years of work experience, went bankrupt in 2014.

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