According to the sales figures released by TELCO, the company has posted mixed results. While medium and heavy commercial vehicle (M/HCV) sales were encouraging with 78% YoY growth, the utility vehicle (UV) sales (down 15%) and light commercial vehicle (LCV) sales (down 8%) continued to languish.
TELCO is India's largest M/HCV (66% market share in July 1999) and LCV (64% market share) manufacturer. It also manufactures utility vehicles (28% market share) and passenger cars (7% market share).
TELCO's 78% YoY growth in M/HCV sales (5,051 units) in August 1999, was on a very narrow base of 2,830 units in August 1998. This takes some sheen off TELCO's impressive performance. Its cumulative sales over the period April-August 1999 posted 50% growth over the corresponding period last year.
(M/HCV market share in July 1999)
Notwithstanding the fact that the sales growth has been posted on a lower base, the company's performance reflects buoyancy in demand. This is mainly due to the bumper agricultural production and the gradual increase in the domestic economic activity. However, with concerns regarding the irregularity and insufficiency of the monsoon in various parts of the country on the rise, the demand for commercial vehicles could suffer a setback.
While TELCO's M/HCV sales were encouraging, its LCVs and UVs sales were disappointing. LCV sales for April-August 1999, fell 3.4% over the corresponding period last year. Cumulative sales for UVs in April-August 1999 declined sharply by 24% over April-August 1998. Decline in the company's UV sales could be due to the fact that it does not have sufficient models to counter Mahindra & Mahindra (M&M) - its main rival in the UV segment. TELCO with only one model (Tata Sumo) is finding it difficult to compete with M&M in the rural segment, which has several models to cater to that segment.
UV market share in July 1999
Analysts have flagged a 'BUY' on the company largely due to its restructuring efforts to hive off its auto components division. Rising CV demand and Indica's impressive performance are other factors that have found favour with analysts.
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