Rising per capita consumption fuelling CV growth

India’s gross domestic product is anticipated to achieve a peak growth rate of 7.8 pc by FY2020. Reforms by the Modi government will lead to growth and will result in revival of commercial vehicles market in India, around second half of FY15.

 According to an analysis done by Frost & Sullivan, ‘Forecast of the Indian Commercial Vehicles (CV) Market’,  the sales volumes of CV will go up from 0.6 million in FY 2014 to 0.9 million in FY 2020. The study covered light CV (LCV), medium CV (MCV) and heavy CV (HCV) in the passenger and goods carriers segments. LCV sales will grow at a compound annual growth rate (CAGR) of 6.1 pc over the forecast period owing to urbanisation. MCV and HCV sales will expand at a CAGR of 7 pc during the same timeframe due to the revival of the manufacturing industry and increased activity in the infrastructure, industrial and mining sectors, a press release from Frost & Sullivan said.

 Frost & Sullivan Automotive & Transportation Industry Analyst said that the rising per capita consumption and infrastructure, Industry & Mining in India will continue to contribute towards growth of the CV market in the country. The CV market is expected to get a significant boost in the second half of FY 2015 and early on in FY 2016, said the analyst.

 A key tailwind for Indian economy to grow is favourable stance of central banks to support the respective developed economies after the financial crisis of 2008-2009. The slow growth of Chinese economy is resulting in lower commodity prices and emergence of US as a major oil producer is impacting the crude oil prices negatively, thus indirectly having a positive impact on the CAD and fiscal situation of India. This along with the current government role in re-establishing the economic strength will drive the economy at higher growth rate compared to last few years, the Frost & Sullivan report said.

On the other hand, it said that the withdrawal of Quantitative Easing by respective central banks and longer gestation time for key reforms to get implemented is a key potential threat that may result in delay in revival of the CV market in India.

 “As total cost of ownership is the important purchase criterion for an Indian Customer, next-generation value trucks in the LCV, MCV and HCV segments are in a sweet spot to shape current consumer preferences,” reasoned the analyst, adding that the “The likes of Tata Ultra, VECV Pro Series, Ashok Leyland Boss/Partner and U Series, along with new players such as Bharat Benz are going to lead the charge in shaping the success of the value truck segment in the market.”