Demand for commercial vehicles – a barometer of economic activity – is expected to post robust growth despite inflationary concerns, which has prompted the World Bank and IMF to revise downwards their growth projections for India in the ongoing fiscal year.
“GST (goods and services tax) collections touched an all-time high last month. Tax collections going up is a good sign,” said Vinod Aggarwal, managing director at VE Commercial Vehicles (VECV). “Potential in the market continues to be very large (despite inflationary concerns).”
Senior industry executives expect replacement demand and a pickup in construction activity to drive commercial vehicle sales this financial year. Industry estimates demand for light and medium duty trucks (over 3.5 tonne) to increase by nearly a fourth this fiscal from 343,000 units in FY22. This will still be significantly lower than peak sales of 557,000 units in FY19. Replacement sales of commercial vehicles have been muted the last three years with consumers deferring purchases amid economic uncertainties and Covid.
Sales of light and medium duty trucks recovered substantially last year, but demand for buses and heavy duty trucks remained low, said Aggarwal who is also vice-president of SIAM. While sales of heavy duty trucks stood at 164,000 units against a peak of 295,000 units, those of buses were only 17,500 units against a peak of 64,000 units 2-3 years back. “If the recovery cycle continues, we should cross the earlier peak in 1-2 years,” he told ET.
The maker of Volvo and
brands of trucks and buses said it has built capacity to meet rising consumer demand.
