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Concerns have been raised concerning the impact on commercial vehicle retail as the Indian automotive sector prepares to transition to the new BS6 OBD-2 standards on April 1, 2023. Yet, the industry is confident in its preparedness this time, as seen by patterns across CVs.
As a result of the new emission standards going into effect, the commercial vehicle category is likely to face a 5% price increase. However, the rate of infrastructural construction, emphasis on manufacturing, and improvements in finance availability are considered elements that may mitigate the damage and actually aid enhance retail sales.
According to Rajesh Kaul, VP - of Sales & Marketing - CVBU, Tata Motors, the new vehicle emission standards are a move in the right way, and the firm will take advantage of this chance to create value for buyers. Government infrastructure expenditure will continue in FY2024, resulting in high demand across segments and applications. Sectors such as e-commerce, FMCG, construction, mining, steel, and the cement will continue to boost demand in the M&HCV and I&LCV categories. Similarly, the SCV segment is likely to perform strongly in the future due to strong demand from agriculture, dairy, and e-commerce.
"The transition to BS6 OBD-2 standards is unavoidable. Nonetheless, I do not believe there will be a significant influence on the commercial vehicle category. Large fleet players account for about 80% of retail sales. Some clients have long-term contracts and purchasing strategies. Their purchasing judgments are not easily influenced. And the price increase on CVs will be less significant than it was from BS4 to BS6." said Manish Raj Singhania, President of FADA.
The industry was previously aware of the timing of the implementation of the new regulations. As a result, it will not have much of an impact on CVs' retail success. In fact, because the majority of CV clients are large fleet owners, the increase in retail price would be minimal for them.
Vinkesh Gulati, Chairman, Research & Academy, FADA stated that there will be an alert of a minor drop in Q1 FY2024 owing to early buying in Q4 to capitalize on "the depreciation benefit of financial year-end."
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