{"id":88768,"date":"2018-08-23T11:30:38","date_gmt":"2018-08-23T11:30:38","guid":{"rendered":"http:\/\/www.bnreport.com\/truck-tractor-companies-join-carmakers-in-the-fast-lane\/"},"modified":"2018-08-23T11:30:38","modified_gmt":"2018-08-23T11:30:38","slug":"truck-tractor-companies-join-carmakers-in-the-fast-lane","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/truck-tractor-companies-join-carmakers-in-the-fast-lane\/","title":{"rendered":"Truck, tractor companies join carmakers in the fast lane"},"content":{"rendered":"

ET Intelligence Group: Over the past two years, Indias truck- and tractor-makers were seeking to join passenger cars on the growth highway, but lingering effects of the currency-note swap and introduction of the uniform producer levy held them back from moving into top gear. <\/p>\n

The fog on the windshield appears to have cleared now. In the past one month, Mahindra and Mahindra, Escorts and Ashok Leyland<\/a> have revised upward their volume growth outlook for the rest of FY19, pointing to robust unmet demand in Asias third-biggest economy. <\/p>\n

Mahindra & Mahindra, Indias largest tractor maker, raised the tractor industry volume guidance to 12-14 per cent for FY19, compared with the previous forecast of 8-10 per cent made after the March quarter results. Escorts, Indias fourth-largest tractor maker, followed the market leader and revised is volume growth guidance to 12-15 per cent for the current fiscal from 9-11 per cent. <\/p>\n

The tractor industry in the three months to June climbed 26 per cent to 2,24,729 units, the highest ever growth in the first quarter. This means to grow at 14 per cent volume growth in the current year, the quarterly run-rate required is 1,95,000 units, which is lower than the first quarter volumes. <\/p>\n

Pawan Goenka, managing director at M&M, said that volume growth in the second quarter is likely to be flat. It will pick-up due to the festive season and could comfortably reach 14 per cent for the full year. <\/p>\n

A couple of factors should boost tractor volume growth. First, although the overall monsoon deficit is higher than the normal range, the geographical spread of the rains has been encouraging. About 82 per cent of India has received rainfall in the average range. Second, sowing has been higher than five-year average and improving rainfall distribution in August may boost sowing further, with late sowing increasing the reliance on modern agricultural equipment. <\/p>\n

Last, the inventory of tractors<\/a> at dealers has been lower than average. <\/p>\n

Typically, the upcycle in the tractor industry ranges between four and five years. Given that this year is the fourth in the upcycle, many experts believe that volume growth could taper down in FY20. However, tractor makers believe that peak volume in the current cycle was reached in the last fiscal year. Hence volume growth could sustain in the medium term. <\/p>\n

The optimism isnt restricted to tractor makers. Ashok Leyland, the countrys second-biggest maker of cargo vehicles, could surprise the Street. Vinod Dasari, managing director of the truck-maker, told ET that the MHCV industry volume growth in FY19 is expected to be 15 per cent, up from the previous forecast of 10 per cent. <\/p>\n

\u201cWe believe the change in axle norms could impact 2-3 per cent of the total industry growth. However, it is likely to be offset by higher volume growth of white goods and improving GDP growth,\u201d Dasari said. <\/p>\n

The MHCV volume in the first quarter of the current fiscal grew 83.5 per cent to 89,027 units, according to SIAM. Interestingly, despite lower sales in the second fortnight of July because of the uncertainty associated with axle norms, Ashok Leyland and Tata Motors<\/a> reported 22 per cent and 25 per cent volume growths, respectively, in July. <\/p>\n

Pre-buying ahead of the implementation of BS-VI norms should prompt the likes of Ashok Leyland to increase vehicle prices by 12-15 per cent. According to Ashok Leyland, industry growth of FY20 could be 30-35 per cent as the transition to new emission norms in countries such as the US and China show that pre-buying lift industry volumes by 30-40 per cent. <\/p>\n

Besides vehicle makers, some supplier industries also revised upward their volume guidance. Balkrishna Industries, a maker of off-highway tyres, has raised its production volume guidance to 2,25,000-2,30,000 tons after the June quarter earnings from 2,20,000 tons earlier. <\/p>\n

<\/a><\/strong> <\/a><\/p>\n

Original Article<\/a><\/p>\n

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ET Markets<\/a><\/h5>\n

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ET Intelligence Group: Over the past two years, Indias truck..<\/p>\n","protected":false},"author":1,"featured_media":88769,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[202],"tags":[],"class_list":["post-88768","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nTruck, tractor companies join carmakers in the fast lane - Business News Report<\/title>\n<meta name=\"description\" content=\"ET Intelligence Group: Over the past two years, Indias truck..\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bnreport.com\/en\/truck-tractor-companies-join-carmakers-in-the-fast-lane\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Truck, tractor companies join carmakers in the fast lane - 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