The Rising Per Capita Consumption in India is Fuelling Growth of the Commercial Vehicles Segment – Notes Frost & Sullivan
Market to Surpass its Past Performance by 2018
Mumbai, Maharashtra, India
India’s gross domestic product is anticipated to achieve a peak growth rate of 7.8 percent by FY2020. Translation of the current governments vision through reforms brought about in the economy and manifestation of the positive effects will result in revival of Commercial Vehicles Market in India, around second half of FY15.
New analysis from Frost & Sullivan, Forecast of the Indian Commercial Vehicles (CV) Market, projects the sales volumes of CV to go up from 0.6 million in FY 2014 to 0.9 million in FY 2020. The study covers light CV (LCV), medium CV (MCV) and heavy CV (HCV) in the passenger and goods carriers segments. LCV sales will grow at a compound annual growth rate (CAGR) of 6.1 percent over the forecast period owing to urbanization, which is a key MegaTrend impacting the LCV Sales positively. MCV and HCV sales will expand at a CAGR of 7 percent during the same timeframe due to the revival of the manufacturing industry and increased activity in the infrastructure, industrial and mining sectors.
“The rising per capita consumption and infrastructure, Industry & Mining in India will continue to contribute towards growth of the CV market in the country,” said Frost & Sullivan Automotive & Transportation Industry Analyst. The CV Market, is expected to get a significant boost in the second half of FY 2015 and early on in FY 2016. Thus, lucrative opportunities will emerge for CV manufacturers during this period.”
A key tailwind for Indian economy to grow is favorable stance of Central Banks to support the respective developed economies after the financial crisis of 2008-2009. Slow growth of Chinese economy is resulting in lower commodity prices and emergence of US as a major oil producer is impacting the crude oil prices negatively, thus indirectly having a positive impact on the CAD and fiscal situation of India. This along with the current governments role in re-establishing the economic strength will drive the economy at higher growth rate compared to last few years.
On the other hand, withdrawal of Quantitative Easing by respective Central Banks and longer gestation time for key reforms to get implemented is a key potential threat that may result in delay in revival of the CV Market in India.
As far as Key Buying Factors are concerned, “As total cost of ownership is the important purchase criterion for an Indian Customer, next-generation value trucks in the LCV, MCV and HCV segments are in a sweet spot to shape current consumer preferences,” reasoned the Analyst. “The likes of Tata Ultra, VE CV Pro Series, Ashok Leyland Boss/Partner and U Series, along with new players such as Bharat Benz are going to lead the charge in shaping the success of the value truck segment in the market.”
