Commercial vehicle sales in India will slow in the current financial year due to weak economic activity and higher vehicle prices.
CV sales, a barometer of economic activity, grew 18% last fiscal to 800,000 but are expected to just touch double digit growth rate this FY as demand for medium and heavy duty vehicles drops.
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Mahindra & Mahindra automotive division head Pawan Goenka said vehicle price increases following duty hikes in the budget, as well as the slowdown in the economy, would keep numbers low.
The 2% increase in excise duty in the budget and 3% special duty on vehicles whose bodies are installed outside a manufacturer’s factory (by local vendors) have pushed up prices.
Tata has raised CV prices by 2-5%. The Society of Indian Automobile Manufacturers (SIAM) has predicted 5-7% growth for heavy and medium CVs while it expects the light vehicle category to grow at a faster pace at 14-16%.
The reserve bank’s recent rate cut is being seen positively by the industry, especially as it signals the end of the continuous hikes in lending rates. More than 90% of commercial vehicle sales in the country are financed and companies say the rate cut will help boost the segment.
Analysts said CV sales depend on the economy as a lot of sales are linked to economic expansion and industrial production and expect demand will be slower in first two quarters.
