Tepid growth of 2-3% expected in CV industry in FY 17
The construction sector is expected to grow by 25 percent during this fiscal on the back of heightened activity in the infrastructure sector. In FY’17 ease of financing and improvement of consumption demand was expected to boost CV sales.
The commercial vehicle industry is expected to grow at a tepid pace of 2-3 percent during financial year 2016-17 due to the effect of demonetisation and the slow recovery thereafter, according to RT Wasan VP sales and marketing at India’s largest CV maker Tata Motors.
In November-December 2016, the commercial vehicle industry had dropped steeply by about 20 percent and has been on a recovery mode since January after the restrictions on cash availability were gradually eased.
Improvements have been witnessed across product segments whether LCVs, or construction, a segment which was doing well right through the year.
The cargo market has also started picking up pace since the last couple of months. In the bus category, privatization has given a fillip to its declining fortunes so that the school, city and staff transport sector are all on the incline.
The construction sector is expected to grow by 25 percent during this fiscal on the back of heightened activity in the infrastructure sector. In FY’17 ease of financing and improvement of consumption demand was expected to boost LCV sales. In the cargo M&HCV segment a double digit growth had been forecast by industry body SIAM with improvement in overall economy led by increase in industrial and agri output.
Vasan told ETAuto that the industry was optimistic about the next fiscal with the advent of the BS-IV emission regime from 1 April 2017. However prices of vehicles are expected to rise especially of M&HCV trucks. There would be a slow start to the year by the CV industry due to pre-buying in FY’17 before the new emission regime kicked in that would slowdown sales in the first quarter of FY’18.
But with the impetus given to this segment by infrastructure development and road construction by the government, the industry would see a growth from Q2 after the impact of pre-buying starts declining.
While the industry is ready with the BS-IV product range, Wasan says that the new technologies harnessed for compliance would boost vehicle prices by 8-10 percent for M&HCVs. Buses would also witness a price realignment of 8-10 percent while LCVs would see a price rise of 6-10 percent.
In terms of new technologies, most of the CV range is already equipped with the anti-lock braking system except for the smaller ones.
In terms of upcoming regulations, some more safety legislation is on its way related to the body code such as cabins that will have to be necessarily be air conditioned in the future.
The bus body code that was earlier announced has only been partially implemented so far and the body code is also believed to be coming up for the truck and trailer segments. LCVs are small units and have been already approved by ARAI.
The overall CV segment registered a growth of 3.49 percent in April-February 2017 compared to the same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) declined marginally by 0.79 percent and Light Commercial Vehicles grew by 6.82 percent during this period.