Growth in India’s commercial vehicle sales volume is projected to experience a slowdown in the low-to-mid-single digits, according to a report by Fitch Ratings on Monday.
The report highlights that increasing regulatory requirements, elevated inflation, and high interest rates have resulted in higher ownership costs, which in turn, have impacted purchase decisions.
In the financial year 2023, there was a notable 34% growth in commercial vehicle sales, with nearly 962,000 units sold, compared to 569,000 units in fiscal year 2020, as per data from the Society of Indian Automobile Manufacturers (SIAM).
Fitch noted that “The 3.3% year-on-year drop in commercial vehicle wholesale volume in the second quarter of FY23 marked the first annual decline since March 2020.” This decline was attributed to preemptive purchases made ahead of price hikes by automakers and availability issues following the adoption of new emission norms.
The latest regulations now require the real-time measurement of emissions, leading to an approximate 5% price increase in commercial vehicles since April 2023.
“We anticipate higher volume growth for medium and heavy commercial vehicles compared to light commercial vehicles, primarily driven by India’s increasing infrastructure activities. Additionally, light commercial vehicles may experience weaker demand in rural areas due to uneven rainfall,” Fitch stated in the report.
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