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Polls To Result In Muted Demand For Domestic CVs: ICRA Domestic commercial vehicles wholesale volumes saw a moderate increase of 14 per cent on a YoY basis in April 2024, although declining 27 per cent sequentially due to the pause in infrastructure activities with the enforcement of the Model Code of Conduct

By Shrabona Ghosh

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The enforcement of the Model Code of Conduct for the General Elections and its impact on infrastructure and construction activities are likely to result in a muted demand scenario for the domestic commercial vehicles (CV) industry in the early months of FY2025, some recovery in demand is anticipated in the latter months of the fiscal as macroeconomic activities are restored. Domestic CV wholesale volumes saw a moderate increase of 14 per cent on a YoY basis in April 2024, although declining 27 per cent sequentially due to the pause in infrastructure activities with the enforcement of the Model Code of Conduct. With a high base effect likely to influence the volume growth momentum, ICRA expects the domestic CV industry's recovery in FY2025, with a marginal decline of 4-7 per cent in wholesale volumes for the fiscal.

More than half of the freight movement across the country is via road, thereby making commercial vehicles a vital pillar for freight movement. This segment is used not only for freight, but also for passenger transportation.

Commercial vehicles in India are segmented by the gross vehicle weight. Primarily, the two categories are light commercial vehicles and medium and heavy commercial vehicles. Light commercial vehicles or LCVs have a weight ranging between 3.5 to 7 tons. All mini trucks, pickup trucks, and minivans within the weight mentioned above range fall under the LCV category. Medium and heavy commercial vehicles is the widest and the heavy range segment of the commercial vehicles sector. MHCV range covers both medium GVW range from 19 tonnes to 28 tonnes and heavy GVW range from 28 tonnes to 55 tonnes.

In the medium and heavy commercial vehicle (M&HCV) segment, retail sales volumes in April 2024 witnessed a marginal growth of 6 per cent on a sequential basis, while reporting a nominal 1 per cent YoY increase. M&HCV volumes in FY2025 are expected to marginally contract by 4-7 per cent YoY, given the high base effect and the impact of the polls on infrastructure activities in the first few months of the year, the report added.

In the light commercial vehicle (LCV) segment, retail sales volumes declined by 5 per cent on a sequential basis (8 per cent YoY growth) in April 2024 as seasonal demand for LCV passenger carriers from educational institutes typically support volumes in the fourth quarter, leading to a high base effect for the sequential trend. Domestic LCV wholesale volumes are likely to decline by 5-8 per cent in FY2025 due to factors such as high base effect, a sustained slowdown in e-commerce and cannibalisation from electric three-wheelers (e3Ws).

The leading players in the commercial vehicle segment across India are Tata Motors and Mahindra and Mahindra Limited, with the former leading the domestic market. Other players included Ashok Leyland, Eicher Motors, SML Isuzu Limited, Force India, and Daimler India Commercial Vehicle Private Limited. A rise in the e-commerce sector, rural consumption, an increase in last-mile connectivity, lower total cost of ownership attributed to the growth of this market. New infrastructure projects and fleet replacement were also among the reasons for demand creation.

The India CV market is segmented by vehicle body type (buses, heavy-duty commercial trucks, light commercial pick-up trucks, light commercial vans) and by propulsion type (hybrid and electric vehicles, ICE). The Indian CV market size is estimated at $48.27 billion in 2024, and is expected to reach $65.26 billion by 2030, growing at a CAGR of 5.15 per cent during the forecast period (2024-2030), according to an analysis by market research firm, Mordor Intelligence.

Shrabona Ghosh


A journalist with a cosmopolitan mindset. I lead a project called 'Corporate Innovations' wherein I cover corporates across verticals and try to tell stories on innovations. Apart from this, I write industry pieces on FMCGs, auto, aviation, 5G and defense. 
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