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Driven by medium and heavy commercial vehicle sales performance, sales of commercial vehicles in the Indian automobile market will grow between 9 to 11 per cent next fiscal.
This comes after volume growth of 31 per cent and 27 per cent in fiscals 2022 and 2023 with demand bouncing back due to increased activity in roads, mining, real estate and construction sectors.
Read also:Automobile retail sales rise 14% in January to cross 18 lakh unit mark
An Increase of 2-5 per cent in realisations as original equipment manufacturers (OEMs) comply with BS VI-Stage II1 norms, and the benefit of lower commodity prices, especially steel, will help improve operating profitability to a four-year high of 7-7.5 per cent next fiscal from an estimated 5-6 per cent this fiscal.
“With strong demand prospects, we expect LCV sale volumes to grow 8-10 per cent next fiscal, and cross pre-pandemic (fiscal 2019) sale volumes. MHCV sale volumes will continue to grow faster than LCVs at 13-15 per cent next fiscal, but are expected to exceed pre-pandemic sale volumes in fiscal 2025,” said Anuj Sethi, Senior Director, CRISIL Ratings.
Light commercial vehicles and Medium and Heavy Commercial Vehicles (MHCV) are likely to register volume growth of 27 per cent and 40 per cent, respectively in fiscal 2023.
Further, the demand for buses is expected to see good traction from educational institutions. Implementation of the mandatory scrappage policy from April 2023 onwards for government-owned vehicles older than 15 years will also aid commercial vehicle volume growth.
Tata Motors which manufactures commercial vehicles also stated that MHCVs are growing because of higher freight availability.
“We see that the freight supply is more than the trucks, which are being put into the market and therefore fleet utilization is going up. MHCVs may grow above 45 per cent on a year-on-year basis for the entire year,” said Girish Wagh, President and Head of the Commercial Vehicle Business Unit, Tata Motors during the Q3 earnings call of the company.
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