very evident that a lot of India’s economic growth is pegged to the new
government that comes into power post election in May 2014. But again, no
miracle can be expected. Leading credit rating agency, ICRA has noted that the domestic
CV industry will close 2014-15 at 636,000 units, reflecting de-growth of 19.7pc
over the previous year.
to ICRA estimates, the CV industry volumes in the current year would be lower
than industry size in 2010-11. However, the sales volumes in the M&HCV
segment would actually be lower than what they were in 2004-05. Thus, given the
low base and some replacement demand owing to ageing existing fleet, ICRA
expects M&HCV sales to start showing some recovery from H2 2014-15 onwards.
a meaningful recovery in M&HCV volumes remains dependant on pick-up in
economic activity post elections in May 2014. The bus segment could grow at a
faster pace as it will start seeing benefits of the budgetary allocation
towards JNNURM with specific plan to add 10,000 buses. In ICRA’s view, the
proposed order will be spread over the next two years and contribute
significantly (8%) to M&HCV bus sales in each of the next two years.
domestic commercial vehicle (CV) industry is currently going through one of its
longest down cycles in recent periods. Having witnessed a decline of 2pc in
2012-13, the industry volumes have contracted by a sharp 19.7pc in 11month of
impact of slowing economy and weak consumer sentiment has also had a trickle
down impact on the demand for LCVs, which shrunk by 16.6pc during the 11 months
of 2013-14. Unlike the previous slowdown, the subdued demand appears to be
uniform across segments of the industry, says ICRA in the report.
Light Commercial Vehicle (LCV) segment had also been in the grip of a sharp
slowdown since the beginning of 2013-14. After having achieved a CAGR of 27pc
over the past five years (FY09-13), the segment’s volume de-grew by 16.6% in
11m 2013-14. The impact of slowing economy and weak consumer sentiment has also
had a trickle down impact on LCVs apart from steady growth that the segment has
witnessed over the past several years. As the slowdown in LCVs has been a
recent phenomenon unlike M&HCVs, ICRA expects further contraction in the
near-term. However, driven by certain structurally favourable factor, the
segment’s growth prospects over the medium-term remain intact.
Picture for representation purpose only
Photography: Mohd Nasir, Motown India
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