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The domestic commercial vehicle industry is projected to grow modestly by 0-3% in FY25, a notable improvement from the previously estimated decline of 4-7%, according to a report released on Monday.
The domestic commercial vehicle industry is projected to grow modestly by 0-3% in FY25, a notable improvement from the previously estimated decline of 4-7%, according to a report released on Monday. This forecast follows a period of positive growth, with FY24 witnessing a 1% increase in wholesale and a 3% rise in retail sales year-over-year. The upward revision in projections is attributed to better-than-expected volume growth in the first four months of the current fiscal year and anticipated demand improvements in the latter half.
Kinjal Shah, senior vice president at ICRA, highlighted that volume recovery in the second half of FY25 will be supported by increased government capital expenditure, a rebound in private capital investment across manufacturing sectors, and improved rural demand linked to better Kharif crop outcomes and farm cash flows.
Additionally, ongoing replacement demand due to an aging fleet is expected to bolster industry volumes in the medium term. Long-term growth drivers remain strong, including continued infrastructure development, rising mining activities, and enhanced road connectivity. For FY25, medium and heavy commercial vehicle volumes are expected to show nominal growth due to high base effects and potential impacts from general elections on infrastructure projects.
Light commercial vehicle (LCV) volumes might see limited growth due to high base effects, a slowdown in e-commerce, and competition from electric three-wheelers. However, the bus segment is likely to experience a growth of 8–11% due to the scrappage of older government vehicles and demand from state road transport undertakings.