Commercial vehicle volumes to witness 4-7% decline

ICRA expects the domestic commercial vehicle (CV) industry’s uptrend to be arrested in FY2025, with a decline of 4-7 percent in wholesale volumes.

This follows a muted YoY growth of 1 and 3 percent for wholesale and retail sales, respectively, in FY2024.

The healthy growth witnessed in H1 FY2024 tapered due to a slower Q4 FY2024, which saw a decline of 4 percent in wholesale volumes.

This was due to factors such as implementation of the Model Code of Conduct and a perceived slowdown in infrastructure activities ahead of the General Elections.

Among the various sub-segments within the CV industry, the medium and heavy commercial vehicles (M&HCV) (trucks) volumes in FY2025 are expected to contract by 4-7 percent YoY,

This is due to the high base effect and the impact of the General Elections on infrastructure activities in the first few months.

The segment closed FY2024 at 4 percent YoY growth, supported by the improved macroeconomic environment and the consequent higher freight availability in the early months of the fiscal, which compensated for the muted demand seen in the latter months.

Within this segment, while the haulage sub-segment reported a 6 percent YoY volume contraction in FY2024, volumes for tipper sub-segment remained flattish for the year on a YoY basis.

The tractor-trailers sub-segment, on the other hand, reported a robust 19 percent YoY volume growth in FY2024.

Domestic light commercial vehicles (LCV) (trucks) wholesale volumes are likely to decline by 5-8 percent in FY2025 due to factors such as a high base effect, sustained slowdown in e-commerce, and cannibalisation from e3Ws.

The segment witnessed a mild decline of 3 percent on a YoY basis in FY2024, owing to the above factors in addition to a deficit rainfall impacting the rural economy.

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