India Commercial Vehicle sector on a strong growth path

Posted on April 24, 2018 Updated on April 25, 2018

Low base likely to push growth further in coming months

The Commercial Vehicle (CV) sector, which is considered to be the barometer of an economy, recorded a surge of 19.9% in unit sales during FY18. The remarkable feature of this growth has been recovery post GST implementation (Image 1). Overall sales of CVs increased by 34% and 31% respectively in Q4CY17 and Q1CY18 after a decline of 9% in Q2CY17.

[Image 1: India CV quarterly unit sales and y-o-y change]

At the same time, the 12-month moving sum of CV sales witnessed sharp northwards movement post July-17 (Image 2). We assign this surge to fleet owners’ bulk buying post GST implementation. Moreover, this trend is expected to continue in coming months given improved macro-conditions at ground level, huge pent-up demand, the higher average age of the fleet and lower comparable (Q2CY17 was down 9% y-o-y).

[Image 2: India CV unit sales 12-month moving sum] Read the rest of this entry »