Business

Domestic commercial vehicle volume to dip for Lok Sabha election?

Interestingly, the dip of 4-7% is due to expectation of a pause in infrastructural activities as the Model Code of Conduct kicks in, says ICRA

Representative image of ICRA logo (photo: National Herald archives)
Representative image of ICRA logo (photo: National Herald archives) National Herald archives

Domestic commercial vehicle volumes are expected to dip 4–7 per cent year-on-year in the next fiscal year, with a high base effect kicking in, rating agency ICRA said on Tuesday, 27 February.

The volumes are expected to remain muted through the January–March quarter on account of a perceived pause in infrastructural activities as the model code of conduct kicks in ahead of the general elections.

"ICRA estimates the domestic CV industry volumes to register 2-5 per cent year-on-year growth in volumes in FY24. Subsequently, the industry's sharp upcycle is expected to plateau in FY25, with a decline of 4–7 per cent in volumes," the rating agency stated.

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ICRA ratings vice president and co-head of group Kinjal Shah said he expects the long-term demand for commercial vehicles to remain intact.

The continued focus on infrastructure capex, emphasis on private participation in infrastructure, construction, defence and manufacturing activities would remain a long-term positive for the industry, he said.

"However, in the near term, ICRA expects the volumes to plateau on a high base, amid the transient moderation in economic activity in some sectors with the onset of the general elections," he added.

Overall, the domestic commercial vehicles industry's ability to scale previous peaks does hinge on sustenance of the macro-economic environment, improvement in infrastructure activity and increased demand for last mile transportation, the ICRA stated.

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