Tata Motors has announced a price increase of up to 2% for its commercial vehicles, effective July 1, according to the company’s statement on June 19. This adjustment is intended to mitigate the impact of rising commodity costs. The revised prices will apply across all models and variants of its commercial vehicle range. Shares of Tata Motors dipped marginally by 0.27% to ₹983.00 apiece on the BSE (Bombay stock exchange) today amid the company’s price hike announcement.

This marks the third price hike for Tata Motors' commercial vehicles in 2024. The company previously raised prices by up to 2% in April to address the lingering effects of earlier input cost increases, and by up to 3% in January. This series of price adjustments follows the recent separation of Tata Motors' commercial and passenger vehicle businesses.

In addition, Tata Motors, which produces models such as the Punch, Nexon, and Harrier, raised prices for its entire passenger vehicle lineup, including electric vehicles, by an average of 0.7% in February.

Industry reports from ICRA predict a downturn for the domestic commercial vehicle (CV) market in FY2025, anticipating a 4-7% decline in wholesale volumes. This follows a subdued growth of 1% in wholesale and 3% in retail sales in FY2024. Although the first half of FY2024 experienced robust growth, the final quarter saw a 4% drop in wholesale volumes due to the implementation of the Model Code of Conduct and a slowdown in infrastructure activities due to the General Elections.

Kinjal Shah, senior vice president & co-group head, ICRA Ratings says, "FY2022 and FY2023 had witnessed a very sharp growth in volume as well as tonnage terms, enlarging the base. The domestic CV volume growth momentum slowed down in FY2024 and is expected to dip in FY2025 amid the transient moderation in economic activity in some sectors in the backdrop of the General Elections. The replacement demand would nevertheless remain healthy (primarily due to the ageing fleet) and is expected to support CV volumes in the near to medium term."

"The long-term growth drivers for the domestic CV industry remain intact, like the sustained push in infrastructure development (evidenced by an increase in the interim budgetary allocation), a steady increase in mining activities, and the improvement in roads/highway connectivity," Shah added.

Despite an anticipated 4-7% year-on-year (YoY) contraction in medium and heavy commercial vehicle (M&HCV) volumes for FY2025 due to the cumulative effect of a high base and election-driven impacts on infrastructure activities, the segment managed a 4% YoY growth by the end of FY2024. This growth was propelled by a favourable macroeconomic setting and increased freight availability during the initial months of the fiscal year, countering the subdued demand in subsequent months.

Conversely, the wholesale volumes of domestic light commercial vehicles (LCVs) (trucks) are projected to decline by 5-8% in FY2025. This decrease is attributed to several factors including a high base effect, sustained e-commerce slowdown, and competition from electric three-wheelers (e3Ws). In FY2024, the segment experienced a slight 3% YoY decline due to these factors, coupled with deficient rainfall impacting rural economic activity.

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