Tata Motors & Ashok Leyland may profit from the Delhi ban


 

There are approximately 40-45,000 trucks registered more than 10 years earlier in Delhi. If at least a quarter of these vehicle owners purchase new vehicles, this may lead to enhanced demand of approximately 10-11,500 trucks.

 

Tata Trucks Sale

Image Source: http://www.findthebrand.com/wp-content/uploads/2015/03/Tata-Motors.jpg

 

The Supreme Court had recently ordered a ban on trucks which were registered before 2005 in Delhi. This may lead to greater demand for heavy and medium commercial vehicles in the form of replacements. This may spur growth between 3-5% for the industry in the medium term and benefit players like Ashok Leyland and Tata Motors. 26% growth is being forecasted for the present fiscal by the industry along with 15% for 2016-17.

 

Compulsory conversion of old trucks will boost volumes for Indian truck makers when they were expecting moderate sales figures in the second half of FY16. Delhi contributes 5% of overall MHCV sales figures in the country. This will boost commercial vehicle makers like Ashok Leyland and Tata who will have to meet increasing demand. Along with greater profitability in this particular segment, experts feel that the ban may also lead to revived demand for light commercial vehicles.

 

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