INDIA'S COMMERCIAL VEHICLE (CV) segment has been experiencing an upward sales trajectory, growing by almost 39 percent year over year (YoY) in the second quarter of the 2023 fiscal year, aided by replacement demand, increased government spending on growth industries like infrastructure, the return to work and school schedules, stable freight rates, and increased e-commerce demand. The mood seems to be similar for the construction equipment sector, which follows trends experienced by the commercial vehicle (CV) segment. Usually, it takes around two months to catch up and the next five months can be a game changer.
Given the improvements in the economy over the past few months, what's happening in the construction equipment industry?
We had a bad time during Covid-19, and even this year, the beginning was not so good. Some of the delays were caused by the extended monsoon across the country. What happens during the rainy season is that our machine operation comes down drastically because of the rain.
However, we have seen some good traction in the market in the last two months, though it is still not what it was pre-Covid-19. Nevertheless, we believe it should reach there by the end of this fiscal year. The growth has been around 10-15 percent overall, though it varies across different categories of equipment.
For instance, while excavators and backhoe loaders grew by around 10 percent, wheel loaders jumped around 25 percent.
What was the trend in the second half of FY23?
We are currently in the second half of FY23, and we normally see good growth in the industry during this period. During these six months, we completed roughly 60 percent of our volumes.
So, if that happens, then some segments of the industry may end up matching the all-time high levels of FY18-19.
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