The Centre's accelerated infra push along with healthy demand from the e-commerce sector has led to a gradual recovery in the commercial vehicle (CV) segment, said automobile major Tata Motors.
Notably, the segment went through a major downturn during the peak of the COVID-19 pandemic.
In a conversation with IANS, Girish Wagh, Executive Director, Tata Motors, cited a gradual recovery in demand post the second wave.
Accordingly, the recovery was triggered on the back of increase in economic activity, which along with a robust rural economy has driven the sales of CVs.
"Increased activity in the last-mile applications like ‘FMCG', ‘FMCD', agriculture supplies, and other e-commerce products have been major catalysts for the increase in demand in small commercial vehicles (SCVs) and intermediate and light commercial vehicles (I&LCVs)," he said.
"M&HCVs (medium and heavy commercial vehicles) have witnessed gradual demand recovery from construction, mining and e-commerce sectors."
In the medium term too, he said the trend is expected to continue due to the revival in growth of the construction and e-commerce sector.
Besides, he cited Centre's recently announced initiatives such as the scrappage policy and the Production Linked Incentive Scheme (PLI) in driving the demand for commercial vehicles in the near future.
"Freight and diesel rate spread has improved sequentially, indicating a revival in demand for freight transport, although the transporter profitability may still be under stress.
"Better freight demand from sectors such as infrastructure development, mining, cement and steel augurs well and is expected to provide the much-needed push for the CV Industry," he added.
According to Wagh, the market situation is improving and the company is optimistic as the infrastructure project gains execution momentum.
"The government's announcement of the National Infrastructure Pipeline (NIP) worth Rs 102 lakh crores until FY24 and a 26 per cent on-year increase in the Capex allocation for FY22 with a sharp focus on infrastructure will support M&HCVs growth in the short to medium term."
At present, Tata Motors has the widest portfolio in the market. It recently unveiled 21 vehicles across segments.