According to a recent study by the leading credit rating agency ICRA, “the domestic commercial vehicle industry sales slowed down over the latter half of FY2019, reeling under multiple headwinds, which have continued into the current fiscal as well.”
The study underlines that the slowdown in growth during H2 FY2019 was led by the M&HCV (Truck) segment, which contracted during the period. “The road transportation sector is currently facing over-capacity, partially contributed by revision in load carrying norms in July 2018, which resulted in a 15-20% increase in capacity of CV parc, and partially by GST implementation and the resultant improvement in turnaround time. Furthermore, the strong growth in CV sales over the past two years outpaced the underlying freight generation, leading to surplus capacity,” Sruthi Thomas, Senior Analyst, ICRA Ratings observed.
The study further underlined that the slowdown in automobile sales in general has led to sharp reduction in demand for car carriers (i.e. tractor trailers), while extended receivable cycle of construction contracts (during moral code of conduct) has also put brakes on Tipper sales over the past few months.