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Industrial Products India, Industrial Manufacturers & Suppliers
 




 
   
 
 
 

Growth momentum in LCVs to

Growth momentum in LCVs to remain strong in medium-term: Icra
 
Projecting a subdued outlook for the commercial vehicle segment in near-term, ratings agency Icra has said that the light commercial vehicle (LCV) segment is likely to suffer some de-growth in the current year.
However, in medium-term, the agency expects growth momentum in the LCVs to remain strong at around 11-13 per cent compound annual growth rate (CAGR).
The LCV sales declined by 3.9 per cent on a year-on-year basis in the April-June quarter of the current fiscal, largely because of slowdown creeping into the small commercial vehicles (SCVs) segment, which has been bellwether for the industry for past few years, Icra said in a report.
After experiencing growth of over 30 per cent during 2009-10 and 2010-11, the buoyancy in domestic CV (commercial vehicles) industry has been on a wane since then, it said.
The slowing industrial growth and weakening investment sentiment across sectors has had a significant adverse impact on CV demand since the second half of 2011-12, it added.
According to the report, while in 2011-12, the growth in the domestic CV industry slowed down to 18.2 per cent vis-a-vis the prior year, the industry volume growth entered into the negative territory in 2012-13.
This was because macro-economic environment continued to remain weak, which, coupled with high-base, led to contraction of 2 per cent in new CV sales.
While in 2012-13, segment-wise performance was characterised by a wide dispersion in growth rates with the LCV segment witnessing a growth of 14 per cent and medium and heavy commercial vehicles declining by a sharp 23.2 per cent, the current year has begun with broad base slowdown, it said.
The high level of discounts, which have been steadily rising and now covering even the LCVs, have also not been able to stimulate demand in a meaningful manner, Icra said.
Since the beginning of the current financial year, the demand for LCVs has also started showing signs of fatigue, largely on the back of high-base effect and overall slowdown.
"Notwithstanding the moderation in growth over the past few months, we expect the demand for LCVs would, however, continue to grow above industry average over the medium-term as it would need to match the extent of capacity added by M&HCVs trucks over the past few years," Icra report said.
The growth will be led by SCVs, which are increasingly being favoured over their three-wheeler counterparts and costlier LCVs on grounds of better power, manoeuvrability and cost economics.
"We also expect that replacement demand will also start contributing to the overall growth in LCVs," the report said.
 

 
     
 
   
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