A report from Fitch Ratings, released on Monday, predicts that the growth in commercial vehicle sales volume in India will slow down to low- to mid-single digits due to increased ownership costs. The rating agency points out that rising regulatory requirements, high inflation, and elevated borrowing rates have driven up ownership expenses, significantly influencing purchasing decisions.
Commercial vehicle sales in India witnessed a 34% increase, with over 962,000 units sold in the fiscal year 2023 compared to 569,000 units in the fiscal year 2020, as reported by the Society of Indian Automobile Manufacturers (SIAM).
Fitch noted that in the second quarter of FY23, there was a 3.3% year-on-year drop in commercial vehicle wholesale volume, marking the first annual decline since March 2020. This decline was attributed to purchases made prior to automakers raising their prices and disruptions in vehicle supply following the implementation of new emission standards.
The latest regulations require real-time emissions testing, which is expected to result in a nearly 5% increase in the pricing of commercial vehicles starting in April 2023.
Fitch’s report suggests that there will be faster volume growth for medium and heavy commercial vehicles compared to light commercial vehicles, driven by India’s expanding infrastructure projects and the susceptibility of light commercial vehicles to potential weaker demand in rural areas due to uneven rainfall.
