May 30, 2021
Blog Admin
According to FY21 sales data released by the SIAM, sales of passenger medium and heavy CVs dropped 81.7% year-on-year and those of passenger light CVs dropped 73.6%, even as the goods counterparts of these sub-segments dropped just 16.8% and 11.5%. While goods CVs appear to be coming out of recession âuntil the second wave hit, their month-on-month sales were rising consistently â analysts argue that passenger CVs (buses and mini-buses) will take a very long time to recover, and CY2021, in all possibility, could be a washout for this sub-segment.
Major buyers of buses and mini-buses in India are state transport undertakings , schools, offices, private transporters and contractors who service schools, corporates, hotels, etc. With schools closed, work from home likely to be a permanent feature at some corporates, and tourism activity not expected to pick-up for some time, sales of buses may remain muted.
March to July is traditionally the period when schools buy buses, but both in 2020 and 2021 that buying all but stopped. âTransportation is a service that schools provide to students and staff. But many schools are realising that owning a bus is not a good investment due to associated issues such as maintenance and parking, and hiring makes more sense. While that indirectly leads to sales of buses, transportation may not be on the top of schoolsâ agenda once they reopen,â he said. âMoreover, many private schools have been drained of their resources, as some states didnât allow them to charge full fees from students during the lockdown, and so they may invest cautiously.â
There has been and will be a big-time impact on buses. âTourism has once again stopped and schools are still closed. The other major buying segment is intercity coaches, but with people increasingly using private vehicles for intercity travel, sales of buses may not revive for quite some time.
The CV sector works on âanticipationâ, that is how does the buyer anticipate the business scenario over, letâs say, next six months or one year. âWhile the trucks sub-segment, linked to movement of goods, may not be severely impacted, the buses sub-segment depends upon reopening of schools, intercity travel, tourism and industrial activity (for ferrying office staff), and it will get negatively affected for sure.
A glimmer of hope could be the replacement demand coming from state transport undertakings ; in this yearâs Union Budget the government allocated Rs 18,000 crore for renewal of urban public transportation by deploying public-private partnerships to operate over 20,000 buses. âThe revival of sales of buses this year will depend upon the interplay of tailwinds in the form of Budget push of Rs 18,000 crore to support the acquisition of 20,000 buses, push by state governments like Delhi, Tamil Nadu and others, and commercial vehicle scrappage policy; and headwinds in terms of short-term impact on shared mobility options on account of the pandemic, subdued demand of school buses and lower than planned allocation on the announced policy/schemes owing to tight finances at both the Centre and state levels
However one Auto-analyst believes that the demand for buses has to pick up because India has a shortage of 11 lakh buses. In India, there are 1.5 buses per 1,000 people, compared to six per 1,000 in China, 30 per 1,000 in Japan and 70 per 1,000 in South Korea.