Commercial vehicle growth to reach 3% in FY25

The commercial vehicles (CV) wholesale volume in India is expected to grow by up to 3% year-on-year in the current fiscal year, according to a report by rating agency ICRA. This is a positive revision from ICRA’s earlier projection, which anticipated a decline of 4-7% in CV volumes for FY25. The adjustment is driven by stronger-than-expected growth in the first four months of the fiscal year and the expectation of a slight increase in demand during the second half of the year.

Despite this modest growth, FY25 will be the second consecutive year of subdued performance for the CV segment. In the previous fiscal year, the segment recorded only a 1% year-on-year growth in wholesale sales and a 3% increase in retail sales. The medium and heavy commercial vehicles (trucks) segment is projected to see a volume growth of 0-3% YoY in FY25. This limited growth is influenced by the high base effect from previous years and the expected impact of general elections on infrastructure activities during the early part of the fiscal year, according to ICRA.

The domestic light commercial vehicles (trucks) segment is also expected to experience muted growth in FY25. Factors contributing to this include a high base effect, a sustained slowdown in the e-commerce sector, and increasing competition from electric three-wheelers, which are beginning to capture market share in this space.

ICRA’s report highlights the challenges facing the commercial vehicle sector, despite the revised growth projections. The overall outlook suggests that while there is some improvement in volume growth, the sector continues to face headwinds that could limit more substantial recovery in the near term.