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September 01, 2019

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

 

Summary

 

Advancement of purchases owing to BS VI norms, to be partially offset by liquidation of BS-IV inventory in fiscal 2020

 

Implementation of BS-VI norm from April 2020 would raise cost of LCVs by 10-12% and MHCVs by 8-10%. Furthermore, transporters are also expected to be cautious in accepting BS-VI trucks as they would have concerns over the vehicles fuel efficiency and maintenance cost. This is expected to lead to an advancement of truck purchases from FY21 into FY20. Supreme Court has issued a clarification in October 2018 stating that BS-IV vehicles will not be allowed to be registered from April 2020. Due to this, OEMs were expected to slow down production of BS-IV vehicles well before the March 2020 deadline. With dealers starting fiscal 2020 at elevated levels of inventory, these inventory levels are expected to drop to lower levels as dealers liquidate BS-IV inventory by the end of the fiscal leading to lower wholesale offtake as compared to retail sales. Prebuying is expected to increase fiscal 2020 CV growth rate by ~800 bps while inventory liquidation is expected to reduce the same by ~500 bps. The net impact will improve sales by 300bps.