The purchase prior to BS6 has not happened, so the demand after April should not be contracted: CEO of VECV
Chennai: The truck market has seen the worst sales in February with a volume of the month lower than the 11-month average, but Volvo expects better days for the industry as of April, as the expected pre-purchase has not happened. In a conversation with TOI, Vinod Aggarwal, MD and CEO, Volvo Eicher Commercial Vehicles talks about why the pre-purchase did not materialize before the BS6 cut and what it means for the truck market. Excerpts
The truck market was betting heavily on pre-purchase before March 31, since the price difference between BS4 and BS6 trucks is substantial. But that is not happening, right?
Yes, we expected some previous purchases, but February sales figures show that no previous purchase is happening. The fall in sales in February was worse than in the previous months, since the category of more than 16 tons witnessed a 51% drop in sales. In the 5-15 ton category, the fall was 37%.
Why was the expected pre-purchase not done?
There is a lot of conservatism on the part of the financiers: they want to make sure that the vehicle is registered after the construction of the body and, if there is any doubt, they are not financing. Original equipment manufacturers do not want to store BS4 vehicles, so we are conservative and distributors are also cautious when storing BS4 vehicles.
What will be the price differential in the BS6 range of VECV?
The price increase will be in the range of 8% -15% for heavy duty and light to medium service range. It will be higher in light duty and lower in heavy duty.
Without pre-purchase, how will the truck market work after April?
If the pre-purchase is not there, the contraction of the demand after March 31 will not be as much. Replacements have to happen and, hopefully, things should be normal. We previously thought that there will be a pre-purchase, so the truck market will contract in April. But that is not happening. Then things should be normal.
Is the LCV market doing better?
Just a little better. The segment of less than 3.5 tons has dropped 11% to date.