Desperate times call for desperate measures. After hitting an all-time low, the country's top commercial vehicle makers are being forced to offer even deeper discounts to jumpstart sales. CNBC-TV18’s Ronojoy Banerjee reports that if the CV market does not turnaround to the pre-crisis level in another 6-7 months, then it could spell doom for the sector.
Despite staring at a debt level of over Rs 5,000 crore Ashok Leyland is being forced to continue big discounts on its heavy duty trucks. Just last week the company unveiled a new state-of-the-art heavy duty truck 'Captain' -- with plans of launching 18 vehicles on the same platform -- in an effort to spruce up demand but it has ruled out any cut back on discounting just yet which has hit an all-time high of Rs 180,000 per vehicle for the company.
Rajive Saharia, Global Head - Trucks, Ashok Leyland says: "Discounting is a response to the market... It will continue for the time industry does not improve"
After being snubbed by the government on its plea for an incentive package to revive the CV industry, there seems to be no light at the end of the tunnel. M&M says discounts have reached a level of upto Rs 400,000 per vehicle.
Pawan Goenka, ED & President, M&M says: “Discounts are in the range of Rs 3 lakh to 4 lakh, CV industry cannot turnaround easily. If six months things don't improve it could be disastrous"
Tata Motors too saw its margins hit a rock bottom of 0.9 percent in the last quarter as losses reached Rs 803 crore on a standalone basis. Average cash discounts for the company have touched Rs 200,000 per heavy duty truck.
Curiously while the blame game is on, no one is willing to pull the plug first. With a weak demand environment, deep discounts and high interest rates, the road to recovery still remains elusive.
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