“This is the best time for customers to buy vehicles” – Girish Wagh, President - CVBU, Tata Motors

The current state of the Indian commercial vehicle industry is known to all. The unexpected slow rate of industrial activity and infrastructure spending has led to the degrowth. Being aware of the areas that need attention, Girish Wagh, President - Commercial Vehicles Business Unit, Tata Motors, opens up to Rajesh Rajgor on cyclical and non-cyclical factors, replacement demand prior to BS-VI, monitoring market and inventory levels, medium- to long-term impact of BS-VI, positives in the bus business and the company’s growing market share in exports.

Give us a sense of the broad direction that Tata Motors has been taking, in the light of uncertainty in the CV Market in India.

CV industry volumes have been severely impacted this year and this can be attributed to various cyclical and non-cyclical factors. The market continued to exhibit subdued demand as customers had been postponing purchases. Of late, customer vehicle enquiries have increased in M&HCV and I&LCVs, with fleet owners initiating discussions for replacement of older vehicles.

In these uncertain times, we have been continuously engaging with our dealers and customers to better understand their expectations and future plans, and accordingly aligning our actions. Our focus has been on reducing stocks in the entire value chain. Retail sale since Q2 FY-20 has been higher than wholesale by 21%, thereby reducing the dealer stock considerably.

We will continue to focus on reducing the overall system stock throughout, including dealer stock in interest of their profitability and working capital reduction. Similarly, we have also brought down our inventory by continuously aligning production to the actual market demand. We continue to monitor the market and industry cautiously, as we are working very closely with our dealers and other relevant stakeholders to respond to the situation appropriately.

What do you make of the replacement demand, pre-buying and post BS-VI demand, particularly for M&HCVs, tippers, and ICVs?