Rating agency Crisil in its latest report has said that the second wave of the coronavirus disease (COVID?19) pandemic and consequent restrictions to curb the infections may limit the commercial vehicles' sales growth to 23-28 percent in 2021-22 as compared to earlier estimate of 32-37 percent rise. It also said despite this growth, the overall commercial vehicle (CV) volumes are likely to be around 30 percent lower in this fiscal year compared to the 2019 level.
According to the report, volume growth hit a decadal-low last fiscal year. It said sit hard by the pandemic, CV sales in India plunged 21 percent to 568, 559 units in 2020-21 as against 717,539 units in 2019-20. The CV market saw two consecutive fiscals of steep volume decline, 29 per cent and 21 per cent in 2020 and 2021, respectively, following multiple headwinds such as revised axle norms, BS-VI transition, and the pandemic. While a sharp recovery from the lows was on the cards this fiscal year, it will be constrained by a weak first quarter because of the second wave of the pandemic.
Rating agency has stated that in April, freight rates fell around 20 percent month-on-month even as diesel prices remained elevated, hurting fleet operators. With lockdowns becoming widespread in May, freight movement, and consequently the profitability of fleet operators, would remain under pressure, weighing on demand at least in the first quarter. As lockdowns ease from the second quarter, freight demand and rates could normalise, aiding demand for CVs.