Tata Motors and Ashok Leyland, the two major players that control three-fifths of the domestic commercial vehicle market, will announce a hike of up to 10 percent across their range from April 1, 2017. The actual hike could be in the range of Rs 50,000-350,000 based on the price of the vehicle.
Commercial vehicle makers are gearing up to initiate a steep price hike across trucks and buses from April 1 even as the industry continues to struggle with subdued demand conditions.
Tata Motors and Ashok Leyland, the two major players which control three-fifths of the domestic commercial vehicle market, will announce a hike of up to 10 percent across their entire range from April 1, 2017. The actual hike could be in the range of Rs 50,000-350,000 based on the price of the vehicle.
The hike will be as a result of the onset of the Bharat Stage IV (BSIV) emission norm that is due to be enforced from the beginning of the next financial year. Companies can continue to produce BSIII vehicles till March 31, 2017. To be sure BSIV has already been in operation in several cities but will now be extended to the entire country.
Ravindra Pisharody, executive director, Tata Motors said, “There would be an increase of 9-10 percent in prices of commercial vehicles following the adoption of BSIV.”
According to Pisharody the segment of medium and heavy commercial vehicles like tractor-trailers, tippers and multi-axle trucks will see the maximum impact as over 90 percent them are BSIII.
Tata Motors is India’s largest commercial vehicle manufacturer with a share of 43 percent. The Mumbai-based company launched a commercial pick-up truck Xenon Yodha in the first week of this month with a BSIII engine.
Rival, Chennai-based Ashok Leyland will also follow suit with an expected near similar hike across its range. The leader in bus segment had announced a hike of Rs 60,000-Rs1.25 lakh on January 1. The BSIV hike will be over and above the hike already announced.
Mahindra & Mahindra, the second largest commercial vehicle maker, raised its prices of light commercial vehicles in the range of Rs 1,500 to Rs 6000 with effect from January 1.
Government of India in a recent notification stated that all trucks and buses sold after April 1, 2017 will have to be equipped with airconditioned cabins. While all manufacturers presently offer airconditioning as an option there are very few takers for it.
“More than 80 percent of CV buyers do not opt for airconditioning because of higher vehicle operating costs. Trucks are not personal vehicles and are mostly driven by hired workers,” said a Tata Motors executive.
BSIV will lead to several mechanical changes made to the engine and powertrains sytems. Use of electronics will increase for pushing greater use of diagnosis as well as overall improvement in fuel efficiency. As a result overall costs will go up.
Due to this it is expected that there will be heavy increase in demand for BSIII vehicles in this quarter followed by a minimum of 10-12 percent drop in the first quarter of next financial year.
“Traditionally, whenever there has been a change in emission norm the preceding month or quarter witnesses heavy buying. These are preponed buys by customers done to beat the price hike. While there is a drop seen soon after it stabilises overtime,” added Pisharody.