Consumer Discretionary

Indian Commercial Vehicle Industry Post Covid

<p style="text-align: justify;"><strong>Indian Commercial Vehicle Industry Post COVID Era</strong>:</p><p style="text-align: justify;">The Indian CV industry is facing some of its worst times in last 4 to 5 years. The overall CV volumes (Trucks &amp; Buses) in F19 was 7,17,688 Units &amp; the sales for the same for F20 was 5,23,329 units which is a dip of 25~27%.</p><p style="text-align: justify;">The reasons for the same are:</p><ul style="text-align: justify;"><li>GST implementation-reducing the waiting times are octroi posts which have vanished since and higher vehicle prices</li><li>Axle Load Norm: with around 10% overload capacity, overall fleet capacity has increased by about 20% in the market thereby reducing the demand for new vehicles</li><li>Increasing diesel prices in Delhi from 50.22 INR per litre in July 2015 to 79.95 INR per litre as on 17<sup>th</sup> Feb 2021, while keeping the freight rates almost unchanged</li><li>Competition from other modes of transportation like Railways (upto 110 rakes, double decker bogies and RoadRailer a bimodal vehicle capable of running on rails as a wagon and on road as semi-trailer truck) and RO-RO services using water transport</li></ul><p style="text-align: justify;">The expected growth of CV industry in F22 is around 25~28% and likely to continue for next 2 years due to:</p><ul style="text-align: justify;"><li>Cyclicity of industry</li><li>Sunrise sectors like e-commerce driving the growth in segments like ILCV</li><li>Infrastructure &amp; Power Generation projects impacting the demand in Cement, Steel, Iron Ore and Coal sectors and thereby in segments like MAV, Tractor Trailers and Tippers</li><li>Implementation of vehicle scrappage policy from April 2022 thereby boosting demand (around 7,00,000 vehicles with more than 15 years age will get scrapped)</li></ul><p style="text-align: justify;">Future Market Trends:</p><ul><li style="text-align: justify;">Modular platforms with higher power to weight ratios and comfort and efficiency enhancement features like AC and AMT/AT</li><li style="text-align: justify;">Alternate fuels (CNG, Biodiesel, Ethanol, Hydrogen)</li><li style="text-align: justify;">Replacement of 3G with 5G</li><li style="text-align: justify;">Telematics/ Video Intelligence: Computer based AI platform with in cab audible feedback</li><li style="text-align: justify;">Prognostics: Integration of IoT and Big Data for routing, scheduling, navigation, monitoring and driver behavior monitoring etc.</li><li style="text-align: justify;">Aggregation of fleets</li><li style="text-align: justify;">Electrification starting with LCVs</li></ul>
KR Expert - Nitin Shrotri