Domestic CV sales are predicted to experience moderate volume growth of roughly 8-10% in FY24

Medium and heavy commercial vehicles (MHCV) are expected to grow by 10-12 per cent in FY24 and light commercial vehicles (LCV) are expected to grow by 6-8 per cent.

According to a recent CareEdge Ratings research, the domestic commercial vehicle (CV) market is predicted to experience moderate volume growth of roughly 8-10 per cent in FY24, despite expected reduced export volume growth, as pent-up demand subsides.

According to the CareEdge rating agency, the CV industry is projected to experience volume growth due to the robust upcycle the industry is experiencing despite the high base impact. According to the survey, the CV industry is currently experiencing a solid upcycle, as shown by a volume growth rate of 1.7 times over the last two years.

Furthermore, it stated that medium and heavy commercial vehicles (MHCV) are expected to grow by 10-12 per cent in FY24, driven by the mandatory scrapping of government vehicles, boosting healthy replacement demand, increasing freight movement amid the government's continuing strong infrastructure push, and increasing housing, construction, and mining activities. The Light commercial vehicles (LCV) are expected to grow by 6-8 per cent, aided by last-mil sales and e-commerce activities.

During FY22 and FY23, the MHCV segment experienced excellent year-on-year volume increases of around 53% and 39.7%, respectively, while the LCV sector experienced growth of approximately 21.7 per cent and 23.1 per cent, respectively.

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According to the analysis, the top three CV players' operating margins are likely to expand by roughly 150 basis points to 14 per cent over the medium term due to higher realisations and lower commodity input costs. The total operating income of the top three CV players has also surpassed FY19 levels, according to the report.

"With tailwinds such as healthy replacement demand, increased freight movement, increased government infrastructure spending, and a continued boom in e-commerce, the CV industry is expected to maintain its growth momentum in FY24 with moderate volume growth of 8-10%. Exports are likely to remain subdued for the current fiscal year," Arti Roy, Associate Director at CareEdge Ratings, said.

CareEdge Ratings also stated that steady demand, price increases throughout the quarters, and changing commodities input prices, will lead to improved profitability margins in the coming quarters.