Economic recovery: Small commercial vehicles sell like hot cakes as goods move at pre-Covid pace

Small commercial vehicles demand picked up in October due to local goods transportation resuming back to pre-Covid levels, auto industry body FADA said. The rise in demand for small commercial vehicles in October follows the trend in the passenger vehicle sales seen in September and is a strong indicator of the incoming economic recovery. Commercial vehicles retail sales in October rose 12.3 per cent on-month; passenger vehicle sales rose 27.7 per cent; and two-wheeler sales remained flat, a Care Ratings report showed.

“Surge in 2-wheelers and passenger vehicle sales are the signs of consumer demands in specific sectors where linkage of the economy is not as high as that in commercial vehicles,” Rajat Bahl, Chief Ratings Officer of Brickwork Ratings, had told Financial Express Online just before the release of the October retail sales figures. If commercial vehicle sales surge, it will be a very strong indicator of economic revival, Rajat Bahl had added. 

However, the rise in commercial vehicle demand remained limited to small segments as the medium and heavy commercial vehicles segment continued to bleed. Rise in transportation of local goods aided by the e-commerce sector, among others, boosted sales of light commercial vehicles. However, the medium and heavy commercial vehicles segment continued to drag due to low freight movement, slower than normal mining activity and low infrastructural activity, Care Ratings said.

Meanwhile, FADA — the auto industry body representing automobile dealers — urged the government to urgently announce an attractive incentive based scrappage policy and release funds for infrastructure projects which it has awarded. It believes that the move will help demand generation and will lead to higher production of vehicles. While the festive season demand for automobiles is expected to be distributed between October and November, and the wedding season demand is likely to last till January 2021, automobile sales are expected to take a hit again after January.