India Ashok Leyland truck sales slump 67pct in Nov

Heavy truck sales at Ashok Leyland Ltd India’s second-largest commercial vehicle maker, slumped by two-thirds in November, data showed on Thursday, and analysts said demand would remain sluggish in the coming months.

A slowing economy that has resulted in a sharp drop in construction activity and a liquidity crunch have squeezed demand for commercial vehicles in India, they said.

Ashok Leyland, which makes trucks and buses, said its domestic sales tumbled 66.7 percent to 1,788 units in November from 5,366 in the same month last year.
Earlier, Tata Motors Ltd, the top vehicle maker, said its commercial vehicle sales fell 40 percent to 16,229 in November, with heavy trucks falling as much as 60 percent.

"Medium and heavy commercial vehicles continue to get hurt by lack of demand for goods movement, drop in road freight rates and high financing costs," Kotak Securities said in a note.

Tata Motors had last month shut production at its plants for up to six days to avoid a build up in inventories, while Ashok Leyland has cut shifts till the end of the year.

"We expect weak headline numbers in coming months too," CLSA Asia Pacific Markets said in a note, attributing it to the production cuts announced by the company.

The central bank has cut its main short-term lending rate by 150 basis points to 7.5 percent since mid-October, but analysts said banks were reluctant to give loans because of the gloomy outlook for road freight and sluggish transportation activity.

Shares in Tata Motors ended up 13.3 percent at 150.9 rupees on Thursday as the market climbed in anticipation of a further rate cut, but the stock has tumbled 79 percent this year.

Ashok Leyland, which has a joint venture with Japan's Nissan Motor Co to make light commercial vehicles, rose 3.1 percent to 13.80 rupees but is down 73.5 percent this year.

In comparison, the main BSE index .BSESN rose 5.5 percent on Thursday but has lost 54.5 percent in 2008.

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