Commercial vehicle industry has been through rough phase in last 3-4 years.
There are early signs of revival in commercial vehicle industry, letβs deep dive to understand, what happened in the past and how companies in this industry are positioned to reap the benefits of upcycle
There are early signs of revival in commercial vehicle industry, letβs deep dive to understand, what happened in the past and how companies in this industry are positioned to reap the benefits of upcycle
ππ‘ππ π‘ππ¬ π‘ππ©π©ππ§ππ ππ’π₯π₯ π§π¨π°?
The commercial vehicles segment, which saw its peak in 2018-19, with industry volumes of over 10 lakh units, went into a downturn in the following two fiscal years, has begun to pick up momentum from the last financial year.
The commercial vehicles segment, which saw its peak in 2018-19, with industry volumes of over 10 lakh units, went into a downturn in the following two fiscal years, has begun to pick up momentum from the last financial year.
ππππ¬π¨π§π¬ π¨π π¬π₯π¨π°ππ¨π°π§- There are some reasons which are responsible for the downturn of commercial vehicle segment
1. Economy Slowdown: CV segment was facing headwinds due to low consumer sentiments, weak rural demand and economic slowdown, impact can be visualized by below numbers in image
lobb.in
lobb.in
2. Semiconductor Chip Issue: During pandemic, semiconductor demand shifted from Auto to Electronic items, which later resulted into supply shortage of the same for Auto Industry.
thehindubusinessline.com
thehindubusinessline.com
3. BS VI & Axle Load Norms- New axle load norms mandated increased load for axles which hurt the CV sales
While on the other hand, BS VI Norms also impacted the CV growth as people were waiting to buy BS IV on discounted rate
business-standard.com
While on the other hand, BS VI Norms also impacted the CV growth as people were waiting to buy BS IV on discounted rate
business-standard.com
Some other reasons were also there like
- New norms for insurance policies
- NBFC Liquidity crisis
- GST implementation
blog.finology.in
- New norms for insurance policies
- NBFC Liquidity crisis
- GST implementation
blog.finology.in
ππ‘ππ π’π¬ π‘ππ©π©ππ§π’π§π π§π¨π°?
Economy is reviving and the headwinds are turning into tailwinds, pent up demand is coming and it is being accelerated by few other factors such as:
- Increased Infrastructure spending
- Growing E-Commerce
- Expansion of logistics
Economy is reviving and the headwinds are turning into tailwinds, pent up demand is coming and it is being accelerated by few other factors such as:
- Increased Infrastructure spending
- Growing E-Commerce
- Expansion of logistics
1. Increased Infrastructure spending: In latest budget βΉ7.5 lakh crores are allocated for infrastructure projects throughout the country. This will boost demand for commercial vehicles as new projects subsequently create demand for new CVs
bfsi.economictimes.indiatimes.com
bfsi.economictimes.indiatimes.com
2. Growing E-Commerce: As rural areas have also started connecting with e-commerce it is likely to generate demand for logistics too, which would result into increased demand of CVs.
economictimes.indiatimes.com
economictimes.indiatimes.com
Now let's check some statements from industry leaders to validate above thesis.
TATA Motors
TATA Motors
Ashok Leyland
Shriram Transport Finance
Craftsman Automation
Sundaram Fasterners
From above thesis, it is evident that commercial vehicle industry is likely to rebound and players who have invested during the past downcycle are going to be benefitted.
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