Strong demand from the replacement market is expected for commercial vehicles (CVs) this year, apart from other reasons such as the growing economy and infrastructure developments, which will lead to the highest-ever growth this year with more than 10-lakh units, an industry veteran said.
“The maximum number of sales will come from the replacement market as BS3 and BS4 trucks/ CVs are getting old and needs to be replaced now. The new trucks are running around 20,000 kilometres a month, which the older trucks cannot do, and therefore the demand for the newer trucks are going to be very strong in the coming days,” Vinod Aggarwal, Managing Director and Chief Executive Officer, Volvo Eicher Commercial Vehicles, told businessline.
The older trucks, especially which are BS3 or BS4 compliant are going to be replaced with the newer (BS6) ones in the next few years, Aggarwal who is also the President of Society of Indian Automobile Manufacturers (SIAM), said. Government had mandated the BS6 norms in all new vehicles from April 1, 2020.
According to figures obtained from SIAM and Federation of Automobile Dealers Associations (FADA), there are more than 65-lakh commercial vehicles running on the Indian roads today, and at least six-lakh are required to be replaced by April 2024.
According to data accessed from SIAM, the highest-ever wholesales (dispatches to dealers) of CVs were achieved in the fiscal year (FY) 2018-19 with 10,07,319 units, which had come down to 7,17,566 units in FY 2021-22. However, again it grew back to 9,62,468 units in FY2022-23.
“More and more buyers want to get new trucks which are more productive/ efficient that can reduce their cost of ownership...so these are the fundamental reasons because the older trucks are not able to meet the requirements of productivity and efficiency and timeliness,” Aggarwal said adding that in the first seven months (April-October) of this year, the heavy duty truck segment has grown already by 15 per cent.
According to analysts also, CV sales have shown the upward trend in the current financial year and therefore expected a surge over the FY19 sales.
“CV sales have shown an upward trend in FY 24 as well which surprised everyone. This is driven by activities and momentum on the macro front, mining, construction, infrastructure etc. Due to these factors, despite CV cycle reaching its fag end, we are seeing its elongation. Therefore we may see FY 24 sales witnessing a surge above FY 19 sales,” Ashwin Patil, Senior Research analyst at LKP Securities, said.