According to India Ratings and Research (Ind-Ra), commercial vehicle sales in India could take longer to recover than expected despite improving macro-economic indicators.

The light commercial vehicles (LCVs) segment has started to recover as they provide last mile connectivity and because of increased e-commerce activities but medium and heavy commercial vehicle (MHCV) sales are unlikely to recover before the fourth quarter of 2021-22, it said.

The ratings agency reiterated that MHCV sales could decline by 35-45 per cent year-on-year (y-o-y) in FY21, though the decline in LCV sales is likely to be contained within 20-25 per cent.

Stating that there is excess system capacity and reduced lower fleet utilisation, Ind-Ra said during April-September 2020, CV sales volumes declined 56 per cent y-o-y, with a steeper decline of 76 per cent recorded in MHCVs.

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Citing Federation of Automobile Dealers Associations (FADA) data, it said that CV retail sales grew sequentially in November 2020 (up 13 per cent from October). However, it remains far behind the average monthly sales recorded during FY19-FY20. Sales volume in November was down 31 per cent y-o-y.

“The MHCV sub-segment, which was already grappling with the excess capacity created in the system post implementation of the revised axle load norms in July 2018 and peak sales achieved during FY18-FY19, suffered significantly with the onset of COVID-19 as economic activities reached an all-time low coupled with capex deferrals across sectors,” the ratings agency said.