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MOSL: AUTOMOBILES | M&HCVs-Higher tonnage trucks back on the recovery path

AUTOMOBILES | M&HCVs: Higher tonnage trucks back on the recovery path?; Gradual increase seen in >35 ton truck pie from Nov’18

 

• The trend of a shift towards lower tonnage vehicles between May-Oct 2018 is showing signs of a reversal with a gradual increase in share of >35 ton trucks from Nov'18 (12.9%) to Jan'19 (16.2%). However, YTD FY19, the same declined by ~450bp to 18.2% (v/s peak of 23% in April'18).
• FY19 YTD, the domestic M&HCV goods industry grew 23% in volume terms outpacing tonnage growth of 16%. However, during FY15-18, tonnage growth outpaced volume growth (21% v/s 16%), due to the overloading ban in certain states.
• But, with increased preference for higher ton trucks since Nov'18, the decline in tonnage growth has been arrested (-11% in Jan'19 v/s -23% in Nov'18 and -32% in Dec'18).
• AL's tonnage market share in M&HCV goods segment declined to 35.5% in FY19 YTD v/s 37.8% in FY18. However, recovery in higher tonnage segment led to tonnage market share gain for AL to 43.5% in Jan'19 (v/s 29.8% in Oct'18) at expense of TTMT (45.9% in Jan'19 v/s 53.1% in FY19 YTD v/s 51.2% in FY18). 

Key observations   

• FY19 YTD, volume growth outpaced tonnage growth in the domestic M&HCV trucks segment (volume growth of 23% YoY v/s tonnage growth of 16%), reversing the earlier trend, with a gradual increase in share of higher tonnage trucks. While this trend reversal was witnessed since Jul’18, the difference between the tonnage and volume growth has widened in 3QFY19 with volume decline of 8.3% YoY, as against tonnage decline of 19.6% YoY. In Jan’19, volume declined by 0.7% YoY v/s tonnage decline of 10.6% YoY.
• The trend of shift towards lower tonnage vehicles witnessed during May-Oct 2018 is showing initial signs of reversing with increase in share of >35 ton trucks increasing gradually from 12.9% in Nov’18 to 16.2% in Jan’19. In FY19 YTD, share of >35 ton declined by ~480bp to 18.2% (v/s 23% in FY18).  On the other hand, share of <16-35 ton declined to 49.6% in Jan’19 (v/s 53.6% in Oct’18).