Medium and heavy truck segment is likely to grow by up to 14 per cent in the ongoing fiscal, while light commercial vehicle sales would remain subdued, rating agency ICRA said today.
M&HCV (truck) segment is likely to grow by 12-14 per cent in FY2016 due to replacement of ageing fleet, improvement in operating economics of fleet operators and some pre-buying ahead of mandatory introduction of anti-lock braking systems (ABS) from October 2014, ICRA said in a statement.
"Unlike M&HCVs, we expect the light commercial vehicle (LCV) segment to remain subdued in FY 2016 (down 2-4 per cent) as segment's prospects continue to be influenced by overcapacity issues and constrained financing environment amidst rising delinquencies," it added.
Nevertheless, driven by certain structurally favorable factor, the segment's growth prospects over the medium-term remain intact, it said.
According to the rating agency, some of the factors that are likely to support steady demand for LCVs going forward include further proliferation of hub-n-spoke logistics model with the implementation of GST, it added.
Commenting on the bus segment, it said: "With new orders placed by SRTUs (under the JNNURM programme), we expect the overall bus segment to register a growth of 8-10 per cent during FY 2016."
In the near-term, commercial vehicle sales would benefit from gradual progression to BS-IV emission norms due to all India coverage by April 2017, ICRA said.
