Commercial Vehicle Sales Slump Predicted Amid Election-Year Challenges

Commercial vehicle sales volume is projected to decline by 3-6% in the current fiscal year due to weakened demand, elevated vehicle costs, and high inventory levels. The slowdown is expected to be temporary, with potential recovery anticipated in the latter half of FY25 as infrastructure projects resume post-elections.

Commercial vehicle sales are forecasted to drop by 3-6% in the current fiscal year, according to a report from CareEdge Ratings.

The decline in sales volume stems from diminished demand in both medium and heavy commercial and light commercial vehicle sectors. Elevated vehicle costs and high dealer inventory levels also contribute to the slowdown, the report states.

The stagnant growth in FY24 is attributed to the high base of FY23, the transition to BS VI standards, and a slowdown in infrastructure projects during the election period, resulting in higher inventory with dealers.

'The commercial vehicle (CV) industry is expected to experience sluggish growth, with overall sales volume likely to decline by around 3-6% in FY25,' said Arti Roy, Associate Director at CareEdge Ratings.

Several factors are affecting the market, including election-related disruptions, increased vehicle costs, and high channel inventory levels, according to Roy.

However, improvement is anticipated in the latter half of FY25 as infrastructure projects gain momentum post-monsoon, and expected interest rate cuts provide relief, Roy added.

Replacement demand and the mandatory scrapping of older government vehicles are likely to support volumes in FY25, according to CareEdge Ratings.

(With inputs from agencies.)