Tata Motors, Ashok Leyland slip on sluggish sales growth
While medium and heavy trucks have had a bumpy ride over the last one year amid the overall economic slowdown, even small trucks like Tata Ace and Ashok Leyland Dost are now finding few takers.
July 02, 2013 / 13:30 IST
Moneycontrol Bureau
Tata Motors and Ashok leyland dropped more than 1 percent on Tuesday, as demand for trucks and buses continues to remain slow and with no recovery in the overall economy seen yet, things are unlikely to improve anytime soon for India's top two commercial vehicle makers.Medium & Heavy CV sales took a knock over the last one year as truck operators and logistics companies shelved expansion as the overall economy and industrial activity slowed, thus leaving their existing capacity under utilised.Last year, at least, small trucks like Tata Ace and Ashok leyland Dost were seeing brisk sales. But now for the last 2-3 months, there are few buyers even in this segment.Tata Motors' investors are also concerned over the company's passenger vehicle business, which has seen sales plunge much faster than the industry.In June, Tata Motors' PV sales tumbled 31.5 percent year-on-year to 11,804 units. Its CV sales were down 10 percent to 36,908 units. Sales of LCVs were down 9 percent and M&HCV sales declined 12 percent.Ashok Leyland's total sales fell 31 percent to 6,967 units in June. While sales of its small truck Dost were down 17 percent, excluding that, sales declined near 37 percent. In the first quarter (April-June) Ashok Leyland and Tata Motors' total sales have declined 21 percent and 19 percent respectively.Companies have offered huge discounts to boost sales in an environment, which is becoming more and more competitive with new players in the fray, especially Bharat Benz (German auto giant Diamler's Indian CV arm) become more aggressive. That, apart from slow sales, is also hurting their profits.Tata Motors is a market leader in the CV space, selling more than half of total industry sales. But, analysts, say Ashok Leyland, which is current number two with over 20 percent share, needs to particularly watch out for the new players accelerating from behind.
In afternoon trade, Tata Motors shares were down 1.6 percent at Rs 285.20 on NSE and Ashok Leyland was down 1.7 percent at Rs 20.30. In the last three months, Tata Motors is up 8.5 percent and Ashok Leyland is down 8 percent. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
