20 Dec 2011;business-standard.com:Swaraj Baggonkar:Mumbai: Bus and truck makers, who defied economic slowdown in the first two quarters, worry about being hit by production drop in major sectors. The recently released Index of Industrial Production (IIP) data, showing steep fall in production in areas such as manufacturing, mining and capital goods, has sent alarm bells to truck and bus manufacturers. Commercial vehicle (CV) sales, growing at 20 per cent so far this year defied the laws of its direct correlation with growth in gross domestic product. Strong demand for light trucks, continued buoyancy in freight rates and sustained activity in certain infrastructure development projects pushed the overall demand. Sales of trucks and buses stood at 499,965 units for April-November against 416,800 units sold in the same period last year. Passenger vehicle sales (of car, sport utility vehicles and vans) during the same period remained flat. Worrying signs: Ravi Pisharody, president, CV business unit, Tata Motors, said, "Freight rates are levelling and this is worrying us. The current positive demand trend can continue only for the next two to three months." High interest rates, rise in fuel price and slowing economic activity would moderate growth in the medium and heavy CV segment. The ban on mining activity in Karnataka has already impacted the business of heavy duty trucks and tippers, stated a business review of Tata Motors, India’s biggest CV maker. Also, bus sales growth has flattened, with a lack of orders from public sector undertakings under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). Bus sales stood at 60,860 units, as against 61,323 units in the April-November period last year. R Seshasayee, executive vice-chairman, Ashok Leyland, said, "We are witnessing some sluggishness in demand, a result of accumulation of several policies in the last few months. CVs are still doing well, particularly light CVs. That is because the retail market is still doing well. The fast moving commercial goods and white goods demand is still buoyant. But I see this petering. I am beginning to see rural demand petering, too. We are certainly near a tipping point."
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