Growth momentum in LCVs to remain strong in medium-term: Icra

However, in medium-term, the agency expects growth momentum in the LCVs to remain strong at around 11-13% CAGR

Projecting a subdued outlook for the commercial vehicle segment in near-term, ratings agency Icra has said that the light commercial vehicle (LCV) segment is likely to suffer some de-growth in the current year.

 

However, in medium-term, the agency expects growth momentum in the LCVs to remain strong at around 11-13% compound annual growth rate (CAGR).

 

The LCV sales declined by 3.9% on a year-on-year basis in the April-June quarter of the current fiscal, largely because of slowdown creeping into the small commercial vehicles (SCVs) segment, which has been bellwether for the industry for past few years, Icra said in a report.

 

After experiencing growth of over 30% during 2009-10 and 2010-11, the buoyancy in domestic CV (commercial vehicles) industry has been on a wane since then, it said.

 

The slowing industrial growth and weakening investment sentiment across sectors has had a significant adverse impact on CV demand since the second half of 2011-12, it added.

 

According to the report, while in 2011-12, the growth in the domestic CV industry slowed down to 18.2% vis-a-vis the prior year, the industry volume growth entered into the negative territory in 2012-13. This was because macro-economic environment continued to remain weak, which, coupled with high-base, led to contraction of 2% in new CV sales.

 

While in 2012-13, segment-wise performance was characterised by a wide dispersion in growth rates with the LCV segment witnessing a growth of 14% and medium and heavy commercial vehicles declining by a sharp 23.2%, the current year has begun with broad base slowdown, it said.