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Tata Motors sees tailwinds for the commercial vehicle industry in Q4

Tata Motors sees tailwinds for the commercial vehicle industry in Q4


Chennai

Tata Motors’ commercial vehicle (CV) business head has expressed optimism about the commercial vehicle sector’s performance in the current quarter, citing encouraging signs such as improving utilisation levels, positive customer sentiment, and a rise in diesel consumption, all of which are expected to drive demand.

After experiencing a double-digit decline in Q2 on a year-over-year (y-o-y) basis, the CV industry showed signs of recovery, with volumes stabilising and remaining flat y-o-y. Among the different segments, buses and vans performed well, growing by 11 per cent y-o-y, while small commercial vehicles saw a modest 3 per cent growth. Intermediate and light-medium commercial vehicles remained flat, whereas heavy commercial vehicles declined by 9 per cent. Despite the more severe decline in Q2, HCVs exhibited quarter-on-quarter growth in Q3.

Utilisation levels started growing in all segments on a quarter-on-quarter basis, particularly towards the end of November. Freight rates improved q-o-q basis. Transporter profitability has also marginally improved with rising utilisation levels. Diesel consumption, which had dropped by almost 15 per cent y-o-y, improved in Q3 with a 5 per cent y-o-y growth, which is a strong indicator of higher utilisation. Our internal customer sentiment index has shown slight improvement, especially following a good monsoon season. Commodity prices remained range bound, Girish Wagh, Executive Director, Tata Motors said during the company’s Q3FY25 earnings call.

He also highlighted that increased government infrastructure spending and tangible progress in infrastructure projects would create favourable conditions for the HCV sector. Wagh said the key end-use industries such as steel, cement, mining, power, e-commerce, and trade are showing early signs of growth, further reinforcing the positive outlook. These factors suggest a promising Q4, and if the quarter concludes with stable y-o-y performance, the industry will be well-positioned for growth in the coming fiscal year.

Indicating a potential positive trend for the industry, Tata Motors, the country’s leading truck manufacturer, reported sales growth across multiple categories in January. However, overall volumes remained slightly lower due to a double-digit decline in the small commercial vehicle segment. Meanwhile, Ashok Leyland, the second-largest player in the medium and heavy truck space, also reported positive truck sales for the month, further signalling an improving trajectory.

Discussing the impact of the Union Budget 2025-26 on the CV industry, Kumar Rakesh, Analyst – IT & Auto at BNP Paribas Securities India Pvt Ltd, highlighted that while near-term growth drivers remain weak, the medium-term outlook appears stronger. He pointed out that the Budgetary allocation for road construction remains unchanged from last year’s revised estimate, which is a setback for the CV industry. However, the overall increase in capex could drive a second derivative demand for CVs.





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