The segment is expected to be sluggish this year on account of the uniform sales tax policy being implemented in most states and the Euro-I emission norms coming into effect.

"There will be correction in the sales growth this year", said a top official of a leading commercial vehicle manufacturer.

The prices are expected to go up further mainly on account of the uniform sales tax in Delhi, Haryana and Punjab. Ashok Leyland has already increased prices by around two per cent earlier this year.

Telco, which is the leader in the commercial vehicle market, "expects the market to grow by 15 per cent this year", a top company official told The Financial Express. The Euro-II emission norms will be implemented in other metros from October 1, 2000 and in the rest of the country by April 2002. The domestic automobile industry has proposed to skip the Euro III emission norms and directly switch over to production of Euro IV compliant commercial vehicles (CVs) from 2007.

For commercial vehicles, the Euro-II will be implemented from April 1, 2002 for new type approval and April 1, 2003 for all production. During April, Telco sold 3,745 units and Ashok Leyland 1,424 of M&CVs. In the light commercial vehicle (LCV) segment, Telco sold 1,901 units, followed by Mahindra & Mahindra which sold 617 units.

During April 1999 to March 2000, the industry sold 111,195 medium and heavy commercial vehicles (M&CVs) as against 83,668 units in 1998-99.

Telco has a installed capacity of 270,000 units excluding the production capacity for Indica. The company has manufacturing units at Pune, Lucknow and Jamshedpur. The heavy commercial vehicles are manufactured at Jamshedpur and MCV, LCV and the Sumo at the Lucknow plant. The Lucknow plant has a capacity of 2,500 units per month of HCV, MCV and Sumo vehicles.

The company has a market share of 66 per cent in medium and heavy commercial vehicles and around 63 per cent in light commercial vehicles. In 1999-2000, the company's total production of medium and heavy commercial vehicles stood at 76,337 units as against 53,917 units in the previous year. The production of light commercial vehicles totalled 38,526 units in 1999-2000 compared to 38,649 units in the previous year.