Domestic commercial vehicle (CV) sales are expected to grow by around 7 per cent in the current financial year on the back of pent-up demand post GST and replacement cycle in CVs driving the sales, as per rating agency ICRA.
The CV sales remained in the slow lane prior to July during the first quarter due to various reasons including pre-buying in fourth quarter of the last financial year and fleet operators deferring new vehicle purchases in view of incoming GST regulation from July 2017.
As a result of these factors, the domestic CV sales contracted by 9.1 per cent during the first quarter with M&HCV (Truck) sales being impacted the most.
"The industry will find its momentum back aided by increased thrust on infrastructure and rural sectors in the recent budget, potential implementation of fleet modernisation and higher demand from consumption-driven sectors," ICRA Senior Group Vice-President Corporate Sector ratings Subrata Ray said.
There has also been considerable improvement in cargo managed by Railways during the same period, he added.
Within the CV industry, the M&HCV (Truck) segment is likely to register a growth of 2-4 per cent during the current financial year aided by pent-up demand post GST, higher budgetary allocation towards infrastructure and rural sectors.
The segment would also benefit from stricter implementation of regulatory norms especially related to vehicle length (for certain applications) and overloading norms, Ray said.
ICRA also expects LCV (Trucks) segment to grow 14-16 per cent in the current financial year, he added.
The ratings agency also expects accordingly, a 10-12 per cent drop in bus sales during the current fiscal as compared to the previous year.