ICRA projects modest growth for LCV trucks amid e-commerce slowdown

Rating agency ICRA projects that the impressive growth witnessed by light commercial vehicle (LCV) trucks during FY23 is expected to subside, settling at a modest growth rate of 0-2 percent. It attributes this projection to the challenging high base effect and a slowdown in e-commerce demand.

The surge in e-commerce activity has been a driving force behind the increased demand for efficient hub-and-spoke-driven last-mile deliveries across the nation. This surge is reflected in the impressive retail figures of 554,585 LCVs during FY2023, capturing a notable 59 percent share of the total commercial vehicle (CV) sales. The LCV segment experienced a growth of 15 percent in FY22, marking a recovery from the 12 percent decline witnessed in FY21, which coincided with the peak of the pandemic.

The growth trajectory of LCVs appears to correlate with the expansion of the e-commerce market. While the pandemic accelerated the adoption of online shopping, leading to a surge in e-commerce activities, a decrease in funding over the past year has resulted in a slowdown in the sector.

According to a report by Redseer, the festive season has commenced with robust sales figures, witnessing a 16 percent increase. This growth can be attributed to festive season sales and accessible financing options. 

The automotive industry will closely monitor the developments in the LCV segment as it navigates the impact of the high base effect, the changing dynamics of the e-commerce landscape, and the potential implications for future growth in the automotive sector.