India's commercial vehicle volume growth hampered by rising ownership costs: Fitch

According to a report released on Monday by Fitch Ratings, commercial vehicle sales volume growth in India will drop to low- to mid-single digits as a result of increased ownership expenses.

The rating agency indicates that the rising regulatory requirements, high inflation, and high borrowing rates have increased ownership expenses, which has a major impact on buying decisions.

Compared to the 569,000 units sold in the fiscal year 2020, commercial vehicle sales increased by 34 per cent to over 962,000 units in the financial year 2023, according to information from the Society of Indian Automobile Manufacturers (SIAM).

Add WION as a Preferred Source

"The 3.3 per cent Y/Y drop in commercial vehicle wholesale volume in the second quarter of FY23 marked the first yearly decline since March 2020," Reuters cited Fitch, adding that this was due to purchases made before automakers raised their prices and problems with vehicle supply following the implementation of new emission standards.

The most recent regulations mandate real-time emissions assessment, which will cause commercial cars' pricing to increase by close to 5 per cent starting in 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,” Reuters quoted from Fitch’s report.

(With inputs from Reuters)

WATCH WION LIVE HERE