The muted growth in FY24 was mainly due to the high base of FY23, the transition to BS VI leading to higher vehicle costs and a slowdown in infrastructure projects amidst elections during the latter part of the year leading to higher inventory with dealers, it added.
“The commercial vehicle (CV) industry is expected to experience sluggish growth, with overall sales volume likely to decline by around 3-6 per cent in FY25,” CareEdge Ratings Associate Director Arti Roy said.
Several factors contribute to this, including general election-related disruptions, elevated vehicle costs, and high channel inventory levels, she added.
“However, there is hope for improvement in the latter half of FY25 as infrastructure projects pick up pace post-monsoon and anticipated interest rate cuts provide some relief,” Roy said.
Replacement demand and mandatory scrapping of older government vehicles are also expected to support volumes in FY25, CareEdge Ratings stated.