Commercial Vehicle Sales Tank 20 Per Cent In Wake Of Post-IL&FS Liquidity Crunch

The liquidity crunch following the debt debacle of Infrastructure Leasing & Financial Services (IL&FS) has strongly affected sales of medium and heavy commercial vehicles, which were just recovering from the immediate slowdown after GST and demonetisation were implemented, reports the Economic Times.

Industry estimates reveal that sales of medium and heavy commercial vehicles have tanked more than 20 per cent in the last month, the most significant decline since May 2017. Many commercial vehicle manufacturers have seen their stocks collapse close to their 52-week lows.

Vinod Aggarwal, Managing director, VE Commercial Vehicles, a joint venture between Eicher Motors and Volvo, states that the IL&FS crisis has caused banks to tighten credit flows to NBFCs, making it much more difficult for truck operators to avail loans to make new purchases.

VE Commercial has seen a decline of 7 per cent in sales last month, selling only 3,935 vehicles. Tata Motors, the largest player in the market, has seen a drop of 24 per cent to 9,793 units in the previous month, and Ashok Leyland’s sales have declined 18 per cent to 8,718 units.

Industry bigwigs expect some improvement in the next quarter. President (commercial vehicle business), Tata Motors, Girish Wagh stated, “We expect to see a rebound in the coming months as liquidity has started to ease and fuel prices have moderated due to reduction in global crude prices.”