Analysts predict that there will be a 35% increase in MHCVs in Budget 2023.

The MHCV industry will grow 26 per cent year on year in January 2023

According to a notification issued by the Road Transport and Highway Ministry, nine lakh government vehicles will be scrapped on April 1, 2023, accounting for 6% of CV and passenger vehicle (PV) consolidated sales over a three-year sales span and including PVs older than 15 years. According to Crisil Research analysts, this will result in incremental demand for cars during the policy period and will likely drive up EV adoption.

According to CRISIL’s assessment of the Budget 2023 on the medium and heavy commercial vehicle (MHCV) sector, sales in the sector are expected to rise 35-37 per cent year on year this fiscal, on a low basis, supported by a healthy 14 per cent increase in capital outlay in the budget. Multi-axle vehicles, tractor-trailers, and tipper trucks will benefit next fiscal year," according to the rating agency report.

"The announcement of funding various government departments for replacement of old vehicles is also commended," said Vinod Aggarwal, President, SIAM and MD and CEO, VECV, in response to the Union Budget.

"A 33 per cent increase in capital outlay with an effective provision of Rs 13.7 lakh crores will spur growth in the economy, resulting in a positive impact on the auto sector," he further added.

According to a report by IIFL Securities, the MHCV industry will grow 26 per cent year on year in January 2023. Based on current estimates and business outlook, the sector's seasonally adjusted annual rate (SAAR), which is around 350 thousand, is expected to rise by 45 per cent.

The Union Budget has also increased CPSE spending to 6.2 per cent of GDP in fiscal 2024, up from 5.4 per cent on average during the pre-Covid-19 decade. With a 25% increase in budgetary allocations to major infrastructure-related sectors such as roads and a 50% increase in spending to 2.5 lakh crore for railways, the MCHV sector, which supports the movement of goods and freight, will see a sharp recovery.

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