The ratings agency said increasing regulatory requirements, elevated inflation and high interest rates have pushed up the ownership costs, thereby weighing on purchase decisions.
There was a 34% growth in commercial vehicle sales at nearly 962,000 units in the financial year 2023, up from the 569,000 units sold in fiscal year 2020, according to data from the Society of Indian Automobile Manufacturers (SIAM).
“The 3.3% Y/Y drop in commercial vehicle wholesale volume in the second quarter of FY23 marked the first yearly decline since March 2020,” Fitch said, adding that this was a result of the purchases made ahead of the price hikes by automakers and vehicle availability issues after the adoption of new emission norms.
The latest rules require the measurement of emissions in real time, leading to a near-5% rise in prices of commercial vehicles from April 2023.
“We expect faster volume for medium and heavy commercial vehicles than for light commercial vehicles, due to India’s rising infrastructure activities and the vulnerability of light commercial vehicles to potentially weaker rural demand due to uneven rainfall,” Fitch wrote in the report.