CareEdge Ratings Predicts Decline in CV Sales for FY25

CareEdge Ratings forecasts a 3-6% decline in Commercial Vehicle (CV) sales volumes for FY25 due to a slowdown in demand in both the Medium and Heavy Commercial Vehicle (MHCV) and Light Commercial Vehicle (LCV) segments, coupled with high inventory levels with dealers. The muted growth in FY24 was attributed to the high base of FY23, the transition to BS VI norms increasing vehicle costs, and a slowdown in infrastructure projects amidst election-related uncertainties, leading to higher dealer inventories.

Despite the anticipated decline, CareEdge Ratings expects demand to recover post-Q2FY25, following the general elections and an uptick in infrastructure projects after the monsoon season. Replacement demand and mandatory scrapping of older government vehicles are projected to support volumes in FY25. The CV sector is expected to exhibit recovery in H2FY25 due to anticipated GDP growth, ongoing infrastructure projects, and potential interest rate cuts.

Arti Roy, Associate Director at CareEdge Ratings, stated, “The commercial vehicle (CV) industry is expected to experience sluggish growth, with overall sales volume likely to decline by around 3-6% in FY25. Several factors contribute to this, including general election-related disruptions, elevated vehicle costs, and high channel inventory levels. However, there is hope for improvement in the latter half of FY25 as infrastructure projects pick up pace post-monsoon and anticipated interest rate cuts provide some relief.”