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Infrastructure Spending Seen Boosting CV Demand

Infrastructure Spending Seen Boosting CV Demand

Home » News » Regions » Indian Subcontinent » Infrastructure Spending Seen Boosting CV Demand
2025-01-27
Aditya Kondejkar
Aditya Kondejkar

“Looking ahead, we expect the gradual increase in infrastructure spending to boost consumption and improve demand, a revival across most CV segments, particularly in buses and vans, which are set to outperform last year’s levels. Intermediate, light and medium commercial vehicles (ILMCVs) are also likely to record similar or improved growth compared to fiscal year 2024.” – Girish Wagh, executive director at Tata Motors

Source: AutocarPro    Read The Article

Market Dynamics and Growth Segments
The CV industry is set to benefit from the government’s pro-growth policies, particularly in infrastructure. The increased Capex outlay of  US$115.5 billion ( ₹10 trillion) in the Union Budget 2023-24 is driving growth in sectors such as steel, cement, mining, and construction, which are key consumers of CVs.

Segment-wise, intermediate, light, and medium commercial vehicles (ILMCVs) are expected to maintain or improve their growth trajectory. The demand for vehicles in the 19-ton category within ILMCVs highlights a shift toward higher capacity and more efficient models. In the heavy commercial vehicle (HCV) segment, the rise of 55-ton tractor-trailers reflects changing cargo transportation needs. Simultaneously, small commercial vehicles (SCVs) are trending toward higher payload pickups, emphasizing productivity

Economic Stability and Infrastructure as Key Drivers
Despite challenges such as geopolitical uncertainties, uneven monsoons, and policy delays, the Indian economy has shown relative stability. This, coupled with healthy fleet utilization levels and replacement demand, is driving growth in the CV sector. A recovering macroeconomic environment, improved mining and construction activities, and steady e-commerce expansion are also contributing to the sector’s positive outlook.

Financial Outlook for OEMs
The financial health of Original Equipment Manufacturers (OEMs) in the CV space is set to improve. Easing commodity prices and better operating leverage are expected to boost profit margins, which could rise to 6-7% in FY23 and further strengthen in the next fiscal year. This profitability aligns with a strong replacement demand cycle and continued fleet modernization.

Challenges to Monitor
While the industry’s outlook appears positive, it is not without hurdles. Weather unpredictability, such as uneven monsoons, could impact agricultural and rural demand for CVs. Policy-related delays and election-linked disruptions may also affect investment momentum. Vigilance and adaptive strategies will be essential to navigating these challenges.

Conclusion
India’s CV industry is positioned for a promising recovery in H2 FY25. Infrastructure spending, shifting consumer preferences, and economic stability are key growth drivers. While challenges persist, the industry’s resilience and adaptability suggest a brighter future. With a projected growth rate of 7-10% in FY24, the sector is set to regain its momentum, steering the wheels of progress and contributing significantly to India’s economic growth.   PSR

Aditya Kondejkar is Research Analyst – South Asia Operations for Power Systems Research

Categories: Construction, Economics, Financial, Indian Subcontinent, Legislation, PowerTALK, Production
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