A large rise in economic growth around the corner with increase in CV sales?

Commercial vehicles (CV) sales grew by 5.6% with sales of trucks and other CVs recording sales of 56,032 units in June. It is not only in June, the sales of CV has been on the rise with nearly 13% growth in Q1FY2016.

The overall CV segment registered a growth of 12.99% in April-June 2016 as compared to the same period last year, according to data from the Society of Indian Automobile Manufacturers (SIAM).

This shows a recovery in India's economy. As a sharp revival in CV sales is often followed by a swift turnaround in the manufacturing sales.

The sharp rise in sales of CV has always been followed by growth in index of industrial production (IIP) data or manufacturing data in the past. CVs are used for the movement of goods and labour within and outside the country. An increase in demand for CVs indicates a rise in demand for more trucks and other commercial vehicles.

CV sales in India have been growing strongly over the past one and a half years even as car sales grew by a mere 1.9% last year and factory output has lagged clocking 0.1% growth in the month of March.

While CV sales has been on the rise in recent months, India's GDP has also increased from 7.2% in December-end quarter to 7.9% in March-end quarter. Showing a correlation between CV sales and economic growth, according to an Economic Times (ET) report.

The report further said that a good growth in CV sales in the previous month can result in as much as a 40% rise in the Sensex in the following month.