CV Dispatches Expected to Drop 3% in February, Says Motilal Oswal Report

Key Highlights:

• CV dispatches may drop 3% in Feb 2025; retail down 6-8%.
• Freight rates stagnant; downturn less severe than before.
• OEMs offer 6-7% discounts, focus on AMC benefits.
• Tipper demands are growing; agriculture sector may improve in March.
• Tata Motors down 3%; Ashok Leyland, VECV up 2-8%.

In February 2025, commercial vehicle (CV) dispatches are expected to drop by around 3% compared to last year. Retail volumes, on the other hand, are forecasted to decline even more sharply, by 6-8%. This info comes from a recent update by Motilal Oswal Financial Services report released on February 27. The report highlights a tough time for the CV industry, mentioning ongoing slowdown issues. Small players are finding it tough, and cautious financing is limiting overall demand.

Freight Rates and Market Challenges

Analysts Aniket Mhatre and Amber Shukla point out that freight rates have not increased, which could make the market even tougher. However, they mention that while demand remains weak, industry players believe the decline is not as bad as in past slowdowns.

OEMs keep a discount of 6-7% to deal with low demand. Instead of just reducing prices, many companies are now offering Annual Maintenance Contracts (AMC) benefits to attract buyers, indicating a change in their sales strategy.

Growth in the Tipper and Agriculture sector

A positive trend in the CV market is the rising demand for tippers. This demand is driven by higher government spending in many areas. The report also notes that agricultural demand is expected to improve in March.

Fleet utilization is currently at 75-80%, while inventory levels have increased to 4-5 weeks due to expected year-end sales in March. Analysts say that Tata Motors and Ashok Leyland are managing their inventory well, which should help them maintain current discount levels.

Motilal Oswal expects Tata Motors’ CV dispatches to fall by 3% year-over-year, while Ashok Leyland and VE Commercial Vehicles are expected to grow by 2% and 8%, respectively. Looking ahead, the Society of Indian Automobile Manufacturers (SIAM) predicts a weak outlook for CVs in FY26, suggesting the slowdown could continue into the next financial year. Despite these challenges, the report notes that the current downturn is not as severe as past cycles, offering some relief to industry players.

January Retail Performance

The Indian commercial vehicle (CV) sector had a mixed start to 2025, with January sales showing both growth in some areas and struggles in others. Analysts link this uneven performance to several factors. The impact of the 2024 national elections is still being felt, as delayed payments and stalled infrastructure projects during the election period continue to affect the industry.

Also Read: Volvo Group Reports 3% Drop in Net Sales for 2024

CMV360 Says

The commercial vehicle industry is facing a slowdown, but the situation is not as bad as past downturns. While lower demand and stagnant freight rates are challenges, OEMs are trying to attract buyers with discounts and AMC benefits. The rise in tipper demand and expected growth in the agriculture sector bring some hope.