Domestic CV Industry Volumes To Grow 2-4% In FY2024: Report

New Delhi, Sept 14 (KNN) The commercial vehicle (CV) segment is likely to witness sluggish start in the first five months (Apr-Aug) of FY2024, averaging 0.2 percent YoY growth in wholesales and 2.8 percent in retail, as per data from ICRA. 

Despite the sluggish demand, ICRA expects the domestic CV industry volumes to grow by 2-4 per cent in FY2024.

ICRA in its report states that the demand for CVs picked up in August 2023, supported by healthy demand from fleet operators. 

“Going forward, steady traction in volumes is expected to be driven by the government’s push towards infrastructure development and overall healthy macroeconomic improvement,” it said.

ICRA further sees that while the introduction of the Scrappage Policy for Government vehicles w.e.f. April 01, 2023, is expected to provide a fillip to the bus segment, but its impact on volumes is yet to reflect meaningfully.

In the M&HCV segment, retail volumes grew by 5 percent sequentially and 9 percent YoY, supported by replacement demand and healthy traction from mining, infrastructure, and construction activities. Going forward, the volumes are expected to pick up as the seasonally-weak monsoon period comes to a close and construction and mining activities pick up pace.

In the LCV segment, retail volumes grew by 2 percent sequentially, however, they contracted by 3 percent on a YoY basis due to the high base effect, slowdown in e-commerce demand, and some cannibalisation by electric three-wheelers. Progress of the monsoons, and its impact on rural demand, remain a key monitorable.

Overall, the domestic CV industry has faced mixed dynamics so far in the first five months of FY2024, with a marginal growth of 3 percent YoY in retail volumes and 10 percent growth in wholesales, brought in by erratic rainfall, transition to tightened emission norms, supply chain issues and elevated interest rates on the one hand, and infrastructure development and replacement demand supporting volumes on the other hand.

The report added that despite the sluggish demand, volumes are expected to gain traction as the year progresses as the healthy allocation for capital spending in the Union Budget 2023-24 is expected to continue to support infrastructure development in segments like roads, metros, railways which augurs well for the CV industry volumes.

 Furthermore, the focus on replacement of old vehicles and on green mobility also bodes well for the industry.  (KNN Bureau)