commercial vehicles: Commercial vehicles set for heavy-duty FY24 sales, revenue expected to rise 30%

Sales of commercial vehicles, a barometer of economic activity, are expected to hit an all-time high in FY24, fetching record revenue for companies such as Tata Motors, Ashok Leyland and VE Commercial Vehicles. Pricier heavy-duty vehicles are driving demand amid record government spending on infrastructure and increased freight movement. FY24 sales may marginally surpass the previous peak of 1,007,311 units in the pre-Covid year of FY19, but revenue is expected to rise about 30% from that year.

Costlier vehicles

Vehicles have become costlier due to more stringent emission norms and there’s been growing demand for trucks with higher payloads-both contributing to higher per-unit revenue.Sales of heavy duty trucks that can carry more freight has grown in healthy double digits – by 15% in the first seven months of the year, said Vinod Aggarwal, president of the Society of Indian Automobile Manufacturers (SIAM) and VE Commercial Vehicles (VECV) chief executive officer and managing director. VECV is a joint venture between the Volvo Group and Eicher Motors.

“The overall load carrying capacity in the system has gone up because of the migration to bigger trucks,” Aggarwal said, adding that the industry is likely to touch or cross the previous high this fiscal year.

Demand for buses has also risen by more than 35% in this period as better highways have boosted demand for travel by road rather than overcrowded trains.

“We do think that we (industry) will hit a new peak and surpass the previous one. The next six months look very promising,” Ashok Leyland executive chairman Dheeraj Hinduja had told ET earlier.

A senior industry executive in a leading CV company said the skew in the commercial vehicles mix was helping.

“To be sure, prices have gone up. But fleet operators are also wanting to replace their older vehicles with more fuel-efficient, newer ones with higher carrying capacity. This change in sales mix will help the industry touch a new high revenue-wise,” he said, asking not to be identified.

By the end of October, the industry had shipped 604,975 trucks and buses compared with sales of 962,468 units in all of FY23 and 592,686 units in the corresponding period last year.

The country’s top truck makers – Tata Motors, Ashok Leyland and VECV – are confident the momentum will be sustained.

High infrastructure spending (Rs 143 lakh crore till 2030), replacement demand, and growth in the domestic economy are expected to support demand.

The Reserve Bank of India expects the economy to grow 6.5% in the current fiscal year.