Commercial vehicle volumes to witness a 4-7% dip this fiscal, Icra forecasts

Hit by a high base of last year and weakness in demand, the domestic commercial vehicle industry is expected to witness a dip of four to seven per cent in wholesale volumes in the current fiscal as compared to FY23, rating agency Icra said on Friday.

The medium and heavy commercial vehicle (trucks) volumes are expected to contract by four to seven per cent year-on-year given the high base effect and the impact of the Lok Sabha polls on infrastructure activities in the first few months.

Similarly, the volume of light commercial vehicles (trucks) wholesale volumes is likely to decline by five to eight per cent in FY2025 due to factors such as a high base effect, sustained slowdown in e-commerce, and cannibalisation from electric three-wheelers, Icra said.

The rating agency expects the domestic CV industry's uptrend to be arrested in FY2025, with a decline of four to seven per cent in wholesale volumes, it stated.

This follows a muted year-on-year growth of 1 per cent and three per cent for wholesale and retail sales, respectively, in FY2024, it added.

"FY2022 and FY2023 had witnessed a very sharp growth in volume as well as tonnage terms, enlarging the base. The domestic CV volume growth momentum slowed down in FY2024 and is expected to dip in FY2025 amid the transient moderation in economic activity in some sectors in the backdrop of the General Elections," Icra Ratings Senior Vice President & Co-Group Head Kinjal Shah said.

The replacement demand would nevertheless remain healthy (primarily due to the ageing fleet) and is expected to support CV volumes in the near-to-medium term, she added.

The long-term growth drivers for the domestic CV industry remain intact, like the sustained push in infrastructure development, a steady increase in mining activities, and the improvement in roads/highway connectivity, Shah said.

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