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September 01, 2018

Sector Report: Commercial Vehicles

This report is available to users in India for ₹40,000 + applicable taxes


Table of Contents


  • Summary
  • Short-term demand
  • Long-term demand
  • Competition & players dynamics
  • MHCV demand framework
  • LCV demand framework
  • Bus demand framework
  • Cost variables
  • Margins and Returns
  • Regulations




Goods carriers to show robust growth; buses to revive in fiscal 2019


CRISIL Research expects domestic commercial vehicle (CV) sales to rise ~18% in fiscal 2019 as:


  • Sales of medium and heavy commercial vehicles (MHCV) in 2018-19 are expected to grow ~16% over a high base
    • Awarding of contracts by the National Highways Authority of India, the nodal agency for road construction, rose 70% to around 7,400 km in fiscal 2018, much of which will come up for execution in fiscal 2019. The government also plans to expedite all road construction by December 2018.
    • With construction being highly labour intensive, the government is expected to push construction projects in the preelection year.
    • The government is likely to focus on major river linking projects in its irrigation thrust and housing construction under Pradhan Mantri Awas Yojna; These schemes will also boost demand for CVs.
    • Expected improvement in GDP growth after lingering impacts of demonetisation and GST implementation dissipate. Industrial GDP is expected to increase by 6.8% in fiscal 2019 as against a 5.5% growth in fiscal 2018.
    • Input tax credit available on purchase of trucks incentivizing CV purchases by LFOs
  • Prevalent overloading practiced by transporters to nullify the impact of axle norm. Higher tonnage MAVs are likely to bemore desirable than T-Trailers post the implementation of the norm leading to some shift in demand
  • CRISIL Research expects LCV goods sales to grow at ~22% on-year in fiscal 2019 aided by higher replacement demandsupplemented by improved private consumption (Private Final Consumption Expenditure growth at 7.6% for fiscal 2019versus a 6.6% growth in fiscal 2018). Higher infrastructure spend in the rural areas, too, is expected to aid demand.
  • Bus demand is likely to see ~11% growth aided by a revival in most of the end-use sectors (especially private stagecarriage, tourist, and schools) over a low base of fiscal 2018.