Indian commercial vehicle sales (including exports) fell by 15.3% to 3.24 lakh units in the nine months ended December 2008, with steeper 47% fall to 75428 units in the quarter ended December 2008. In this context, Crisil has said that sales of different categories of CVs are down by 10 to 20% on a year to date basis in the current fiscal, and the quarter ended December 2008 was especially severe with sales declines between 40 to 60% compared with the December 2007 quarter. Crisil indicated that as the economy slows down, it believes that the downturn in (commercial vehicle) sales could intensify and last for at least a year more.
Crisil said that since September 2008, the domestic commercial vehicle producers have resorted to significant production cuts and other cost reduction measures to deal with falling demand and to align production with sales. But these measures will only partly offset the strain on their cash flows and profitability, given the severity of the volume decline, said Crisil. It is carrying out a comprehensive assessment of the impact of these adverse trends and the challenging operating environment on the ratings of Tata Motors and Ashok Leyland. Crisil indicated that any rating or outlook change as a result of this assessment will be announced shortly.