Demand is recovering for Volvo Eicher Commercial Vehicles (VECV), which saw a 69 per cent rise in sales during the first eight months this financial year over the same period in FY21.
Vehicle sales have climbed to 30,830 in FY22 against 18,200 in the first eight months of FY21 and are expected to exceed pre-pandemic figures this financial year.
However, Managing Director and Chief Executive Officer Vinod Aggarwal sees industry recovery in various segments on a slow track owing to several reasons, including the pandemic, rising fuel prices, input costs, and the chip crisis.
VECV holds a 31 per cent market share in light and medium-duty vehicles, 20 per cent in buses, and 7.5 per cent in the heavy-duty segments.
The company sold 32,050 units during the first eight months of 2019-20.
“During the last four months of the previous financial year, we sold over 23,000 units, and even if we sell the same number this financial year, we will touch around 55,000 against 41,260 last financial year,” Aggarwal said.
VECV is a joint venture between Volvo Group and Eicher Motors.
However, he expressed concern about the rising fuel prices, citing that as one of the reasons affecting a faster recovery in sales.
Last week, the Society of Indian Automobile Manufacturers (SIAM) had elected Aggarwal vice-president for 2021-22.
“When our customers are in pain, that translated back to OEMs (original equipment manufacturers). In addition to this, rising input costs like those of steel are putting pressure on companies,” Aggarwal added.
He said the ongoing chip shortage would continue for some time and the efficiency of a company would be proved by smart supply management.
Interestingly, sales of buses weighing more than five tonnes had gone down from a pre-pandemic peak of 72,000 to around 12,000 during the last financial year. During the first eight months of this financial year, sales were around 7,500 units. Even if the industry clocks 12,000 more, it will be around 20,000 units this financial year.
“Buses on the heavy-duty truck platform (15 tonnes and above) are 18,000-20,000 at its peak period. The balance 50,000 is the 5-15-tonne range. Of those, a large share of 40 per cent is contributed by school buses. Once schools completely re-open and the tourism sector turns normal, the segment will recover,” he said.
On the other hand, he expects heavy-duty trucks (18.5 tonnes and above) to take another two years for their recovery.
He said trucks in the 5-16-tonne range and smaller commercial vehicles were likely to touch pre-pandemic levels. When asked why the company was not aggressive on electric bus tenders, he said, “We are careful in this.”
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