Commercial vehicle sales exceed estimates in Q1

9 Jul 2024 , 09:49 AM

Commercial vehicle sales, a key indicator of economic activity, exceeded estimates last quarter, owing to strong replacement demand and ongoing government infrastructure expenditure.

According to industry estimates, more than 234,000 trucks and buses were sold on the local market in the three months ending June, up 4.5% from 224,000 vehicles sold the previous year.

CV manufacturers such as Tata Motors and Ashok Leyland said the sector projected sales to fall in the fiscal first half due to the introduction of the election model code of conduct and a perceived slowdown in infrastructure activity during an election year.

Demand momentum is likely to increase further in the second half, with sales rising by 9-12% to more than 1 million devices in FY25, breaking previous records. During the pre-pandemic peak in FY19, up to 1,007,311 trucks and buses were sold, followed by 967,878 units in the previous fiscal year.

The Reserve Bank of India (RBI) raised its real GDP growth prediction for FY25 to 7.2% from 7% in its June monetary policy review, citing improved global trade and a recovery in rural demand.

In the interim budget announced in February, finance minister Nirmala Sitharaman upped capital allocation for infrastructure development to a record ₹11.11 lakh Crore for FY 25.

Industry stakeholders anticipate that the emphasis on capital investment, particularly in growth-related initiatives, would continue even as government finances recover.

India’s fiscal deficit was 5.6% of GDP in FY24, down from the revised estimate of 5.8%. At the same time, the Centre’s net tax receipts in the previous fiscal year exceeded expectations, totaling ₹23.27 lakh Crore, or 100.1% of the year’s objective.

Overall, India is expected to spend ₹143 lakh Crore on infrastructure over the next seven fiscal years, through 2030, which will underpin truck and bus sales in the medium term.

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