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Table of Contents
Competition & players dynamics
MHCV demand framework
LCV demand framework
Bus demand framework
Margins and Returns
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.