Commercial vehicle domestic sales outlook FY 2020- FY 2024

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Source: SIAM, CRISIL Research
MHCYV segment to log moderate growth on a low base

MHCYV sales are likely to rise by 8-10% compound annual growth rate (CAGR), over a low base, from fiscal 2020
to 2024 (four-year CAGR), as compared to the previous five-year (FY15-20) fall in CAGR of ~1%. Moreover,
tonnage addition is expected to improve by 9-11% CAGR due to a better product mix (higher growth in MAV
and T-Trailer demand despite a shift to lower tonnage vehicles due to axle norm). Long term growth to appear
higher over a low base after a ~47% drop in sales in FY20. The four-year growth will be despite an expected fall
of ~26-28% in fiscal 2021 due to the COVID-19 outbreak.

Factors driving long-term MHCV sales will be the improving industrial activity in the country, steady agricultural
output, and the government's focus on infrastructure. However, volume growth will be limited due to efficiencies
achieved from the goods and services tax (GST), better road infrastructure along with the commissioning of the
dedicated freight corridor (DFC).

Segment wise projections of MHCV cargo

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Warehouse consolidation translating into higher demand for
ICVs for movement of goods from warehouses to
consumption centres. Demand to be aided by e-commerce
industry purchases and improvement in consumption

 

expenditure
MCVs | 12.0-16.2 a) % 4-6% MCVs to be cannibalised by ICVs at spokes and MAVs at
(ex- hubs.
tippers) Consumption sectors, such as FMCG/FMCD and e-

commerce, to be key for next 1-2 years, Auto carrier segment

may start gradually inching up post fiscal 2022. MAV tippers

__ — _to grow ata higher pace than MCV tipper |
a@y% 15-17% Increasing popularity of hub and spoke model, and improved

 

 

 

 

 

 

 

 

 

 

 

 

 

MAVs

(ex road infrastructure to drive demand for higher tonnage MAVs;

tippers) owing to shift to higher tonnage MAVs and efficiency gains
[eiue'to removal of check posts/and higheravermpe speed

Tippers >12.5 5% 10-12% | Improvement in mining and construction over the long term
to prop up sales. Growth to appear higher due to low base in
FY20

“T-trailers  >16.2 5% 4.6% Increasing need for higher tonnage vehicles along with better

| road infrastructure is expected to boost demand. However,

|. - _ | DECs, once commissioned, would impact sales

Total | >75 ()% 8-10%

MNCs |

 

 

LCV sales to grow at a modest pace in the long run

Light commercial vehicle (LCV) demand is expected to expand at 4-6% CAGR from fiscal 2020 to 2024, due to
higher private consumption, lower penetration, greater availability of redistribution freight and improved finance
availability post FY21. Long term growth appears to be sluggish after an expected 9-11% drop in sales in FY21,
post which demand to rise at a healthy pace. Within LCVs, the shift towards pick-ups (which carry higher loads)

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