The domestic commercial vehicle industry growth has moderated from 11.5 per cent growth in FY2016 to 3.5 per cent in the 11 months of FY2017, according to the latest report of rating agency ICRA. The sector is expected to close the fiscal with a growth of 5 to 6 per cent.
A confluence of factors including waning replacement demand, weak cargo availability from the industrial sectors and uncertainty related to effective taxation due to the enforcement of GST from 1 July 2017 have contributed to the slowdown. The road logistics sector that depends on cash transactions was further hit after demonetisation and subsequently applied the brakes on the domestic CV sector.
With the transition to new BS-IV emission norms from April 2017, the industry was expected to witness pre-buying in the last quarter as vehicles complying with new emission norms were expected to become 6-10 per cent more expensive due to technology upgradation. Though the industry recovered in January-February, the recovery has been slow.
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