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March 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




Low finance availability to truckers hurting MHCV sales


Prevalent NBFC liquidity crunch has raised CV lending rates 50-150 bps, lower finance availability and lower resale value of trucks (hurting replacement demand). Moreover small fleet operators profitability has reduced due to their inability to migrate to forward charge mechanism of paying GST (preferred by large consignors), reduced ability to overload after axle norm accompanied by further stringency on implementation of overloading ban and the subsequent inability to pass on higher input costs on account of reduced competitiveness. Thus SFOs, especially the ones working on market load are finding it difficult to pay EMIs leading to financiers limiting finance to such category of transporters hurting MHCV sales.


Advancement of purchases to due to implementation of BS-VI norm to aid demand


Implementation of BS-VI norm from April 2020 would raise cost of trucks to the tune of 10-12%. 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. We expect CV to grow by ~13% in fiscal 2020 and had it not been for the pre-buying CV sales would have grown by a modest ~5% in fiscal 2020