Commercial Vehicle sales positively impacted by e-commerce demand

The e-commerce space has helped contribute to a 7-10% in Tata Motors’ sales and 25% of Ashok Leyland’s sales in FY 2020-21

February 10, 2021

Tata Motors’ Medium and Heavy Commercial Vehicles and Ashok Leyland’s haulage and ICVs were of great demand.

E-commerce activity has been higher in Bangalore, Pune and Ahmedabad, Mumbai, Chennai and Delhi-NCR.

The following of social distancing protocols has enabled customers to shift to the digital medium for heavy vehicle purchase.

The adoption of the phygital model within the sector has allowed for the success of vehicular sales post 2015.

Tata Motors and Ashok Leyland, in a conversation with media sources, recorded that the e-commerce sector has contributed to 7-10% and 25% growth in sales. Tata Motors’ Medium and Heavy Commercial Vehicles cargo offerings and Ashok Leyland’s Intermediate Commercial Vehicle and haulage offerings were the items in demand. These statistics reflect the increased potential for digital adoption within the sector. Given the social distancing protocols in place, customers also appear to have favoured the e-commerce space. Girish Wagh, President, Commercial Vehicles Business Unit at Tata Motors observed “FY 2020-21 has seen good growth in e-commerce buoyed by increased demand shift from offline to online in consumer segments, the rapid increase in online sellers on the e-commerce platform, steady addition of new e-commerce platforms in India, larger number of transporters entering e-commerce logistics and higher and wider logistics needs.” Metro cities including Mumbai, Chennai and Delhi-NCR as well as Bangalore, Pune and Ahmedabad are sites of key e-commerce demand for the sector that is otherwise dominated by infrastructure clientele. 

The mid-2010s saw an attempt by Flipkart to sell cars and bikes on their platform to help increase sales within the sector. Subsequent observations by researchers and industry leaders would reveal that the attempt was largely unsuccessful owing to the lack of physical inspection facilities prior to purchase. Dealers would soon take corrective measures by adopting the phygital model and facilitating the viewing experience through bookings on their own website. Media reports also document the rise of third-party facilities like CarDekho that help users make informed decisions with regard to the purchase and sale of used or new cars in India. Adopting the phygital model would allow potential customers the opportunity to evaluate their vehicles of choice before making the final decision. In the interest of larger digital adoption within the sector, PWC recommends the following areas of implementation : (i) Supply chain , (ii) Inbuilt smart technologies in vehicles, (iii) Business model digitisation. A well thought out strategy towards the sectoral adoption of digitisation can help sectors of the economy including the automobile space scale up against the backdrop of the pandemic.