Domestic commercial vehicle industry expects to grow by 7-10% in FY24: Icra

The domestic commercial vehicle industry volumes are expected to grow by 7-10 per cent in FY2024, supported by replacement demand, pick-up in mining, infrastructure construction activities and overall healthy fleet utilisation levels, rating firm Icra said on Thursday.

This is despite the 5 per cent year-on-year and 41 per cent sequential contraction in volumes in April 2023, it noted.

The growth in FY2024 would follow a year of healthy demand in FY2023, wherein the industry volumes expanded by more than 33 per cent, supported by a favourable base, as well as a healthy pick-up in macroeconomic activity, Icra said.

The scrappage policy, which was announced in March 2021, has been implemented from April 1, 2023, and is likely to contribute to the growth of new commercial vehicle sales, it added.

"The major impact of the scrappage policy is expected in the CV (Commercial Vehicle) segment, especially passenger carriers, as the usage of other vehicles such as two-wheelers, passenger vehicles, etc. beyond 15 years would be limited," Icra Corporate Ratings Vice President & Co Group Head Kinjal Shah stated.