Commercial vehicle sales likely to rescale FY19 peak in two years

Commercial vehicle sales are likely to rescale or near the FY19 peak in two years, if the current growth in CV sales continues.

The demand will overlap with the general elections in 2024. Last general election year 2019 witnessed CV sales cross the one-million mark.

Lowest in a decade, CV volumes in FY21, at 5.68 lakh units, were just better than the FY10 figure of 5.31 lakh. With the final quarter of FY22 underway, the CV segment is likely to end the year with more than 6 lakh units.

Ageing fleets, continued increase in freight rates, enhancing truck utilisation, strong demand from e-commerce players and maintained demand from infrastructure firms will help drive demand for commercial vehicles, primarily trucks.

Total truck usage in the nation is estimated to have enhanced to 45-50% in some sectors, it has surpassed 85%. As recently as Q1 this year, trucks were idling 10 days per month.

Jalaj Gupta, Business Head (commercial vehicles unit), Mahindra & Mahindra (M&M), told the media that after the peak in FY19, they witnessed two consecutive years of decrease. Beginning this year, they expect a reversal of the curve. They will observe development every year at least till the general elections.

According to the Society of Indian Automobile Manufacturers (SIAM) data, domestic CV sales jumped 30% to 4,66,763 units in the April to December period this year, compared to 3,58,203 units the corresponding period last year. While last year’s comparable data is on a low base, the double-digit increase this year is due to strong fundamental demand, as per the market experts.

Since June 2021, after the second Covid-19 wave, freight costs for trucks gradually gained momentum along with enhancing utilisation levels. Rate decrease in November was due to a significant drop in diesel excise duty by nearly 10%.

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