A recovery in medium and heavy CVs from multi-year lows, along with sustained growth in light CV categories, will help overall CV volume to reach close to 1-million units by FY24 – the level of the last cyclical peak recorded in FY19, it said.
According to Fitch, domestic CV sales volume are expected to grow in the mid-to high-teens over the next few years.
Factors like rapid recovery in India’s economic activity after the pandemic shock and the government’s planned increase in infrastructure spending will help sustain an improvement in fleet utilisation rates, supporting freight economics for operators, it said.
This should aid the revival of the replacement cycle, notwithstanding pressure from high inflation and a rise in borrowing rates since the start of the Russia-Ukraine war, it added.
The growth in the passenger CV category, which experienced a sharper pandemic impact due to travel restrictions and the suspension of school and office commutes, will also aid growth, despite its smaller share of below 15 per cent of the overall CV volume prior to the pandemic, Fitch said.
High fuel rates will also spur replacement of older CVs with new, more energy-efficient vehicles, including those with compressed natural gas drivetrains in the smaller categories, as per the report.
The ratings agency said it believes growing loan disbursements by CV financiers will bolster sales over the medium-term.
Improving earnings visibility for fleet operators, along with manageable asset quality and funding access for lenders, should underpin credit availability, it stated.
