Home Commercial Vehicle MHCVs Commercial vehicle sales to contract by more than one-third this fiscal: CARE...

Commercial vehicle sales to contract by more than one-third this fiscal: CARE Ratings

Mumbai: Commercial vehicle sales are expected to decline by more than one -third within the present fiscal and business wants demand revival, a report said on Friday.

The home business vehicle (CV) business continues to exhibit cyclicality as witnessed within the last 20 years however the stoop witnessed in fiscal year 2020 was sharp with sales quantity declining 29 per cent year-on-year (Y-o-Y) to 7.2 lakh models, Ratings agency Care Ratings said in its report.

During fiscal year 2020, when it comes to unit quantity, M&HCV (medium and heavy business vehicle) accounted for 31 per cent of the overall CV sales, whereas LCV (light business vehicle) accounted for the remainder of sales within the home market.

Also, whereas M&HCV sales declined 42 per cent, the LCV section quantity was 20 per cent decrease throughout the earlier fiscal over fiscal year 2019, as per the report. The business is looking at additional de-growth in fiscal year 2021 as COVID-19-led financial downturn provides to the unfavourable sentiment, it said.

“As the macro numbers continue to disappoint and likely to weaken further, it is threatening to take the CV industry on a prolonged slowdown. For fiscal year 2021, overall domestic CV sales are expected to decline by 30-35 per cent with a more severe hit in the M&HCV segment than LCV segment,” Care Ratings said.

The contraction within the LCV section is expected to be restricted because the demand from rural and semi-urban markets are expected to get better sooner on account of upper agriculture output on the back of fine monsoons throughout the present year, it added.

The total volumes are expected to step by step decide up throughout the second half of the fiscal from the present lows; nevertheless, any significant demand restoration is expected from fiscal year 2022 solely, it said.

While this is probably going to influence the monetary efficiency of assorted home CV gamers, majority of them are higher positioned to manoeuvre the downtrend than previously, it said, including, the business wants revival measures that deal with each short-term and long-term demand.

“Despite no direct stimuli to boost CV demand being announced under the ‘Atmanirbhar Bharat’ package, reforms being carried out in certain sectors are expected to improve CVs demand in the medium term,” Care Ratings said.

Measures together with commercialisation of coal mining, introduction of seamless composite exploration-cum-mining-cum manufacturing regime for minerals, liquidity increase to NBFCs (non-banking monetary establishment) and measures to enhance agriculture and allied sectors infrastructure, may have a constructive influence on CVs demand within the medium time period, the report said.

“Demand revival could be hastened in case of implementation of long due scrappage policy, reduction in GST rates from the current 28 per cent along with substantial economic measures including government’s push towards additional infrastructure projects,” the report said.

With the outbreak of COVID-19 pandemic, financial actions throughout the nation stay disrupted since March due to lockdown.

During the April-June 2020 interval, home sales have been negligible due to lockdown, it added.

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