Go Back   Team-BHP > BHP India > Commercial Vehicles

Thread Tools Search this Thread
Old 19th November 2015, 12:22   #1
Team-BHP Support
Join Date: Feb 2004
Location: Mumbai
Posts: 6,345
Thanked: 16,896 Times
Default ICRA report on the commercial vehicle sector

ICRA has reported that it expects the medium and heavy commercial vehicle (M&HCV) industry to grow at a rate of 19-21 % in FY 2016. According to ICRA, this growth is expected due to the improving viability for fleet operators and replacement-led demand (following two years of capacity deferral by fleet operators).

The first half of FY 2016 has seen the segment grow by 35%. The government will be implementing the BS-IV emission norms soon and anti-lock braking systems will be made mandatory. This has led to pre-buying of vehicles fuelling the growth.

ICRA report on the commercial vehicle sector-truck.jpg

According to fleet operators, the demand for road logistics hasn't increased much and rising operating costs and weak bargaining power had resulted in the industry taking a beating. The reduction in diesel prices has come as a relief for the industry.

With the improvement in cash flows of fleet operators, an improvement is seen in collection efficiency for CV financiers, who expect that further deterioration in asset quality indicators is unlikely.

While M&HCV industry is expected to grow, the light commercial vehicle (LCV) industry is expected to see a decline of 8-10%. In FY 2016, the segment continues to be affected by overcapacity issues and a constrained financing environment.That said, the segment is likely to see a growth over the medium-term. The demand is expected to grow at 11-13% over the longer term.

The report states that across OEMS, the Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margins have improved between 400-600 bps during the current fiscal year. A further margin expansion driven by improving operating leverage (i.e. higher sales), lower raw material prices and some discipline among OEMs with regards to discounting strategies is expected. In addition, growing exports and an increasing trend towards factory built vehicles (FBVs) following the implementation of uniform bus body norms is also expected to support margin expansion. While OEMs have been implementing cost rationalization plans, there will be some cost pressures, especially related to manpower cost and likely increase in expenses related to new model launches.

ICRA expects credit profile of CV OEMs to remain stable over the medium term on back of higher internal cash flow generation and relatively limited capital expenditure requirements.
Aditya is offline   (3) Thanks Reply With Quote

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Mitsubishi wants to enter commercial aircraft sector - completes maiden test flight Tushar Commercial Vehicles 1 13th November 2015 15:26
Credit Suisse Report: The Indian Auto Sector, 2013 GTO The Indian Car Scene 10 28th November 2013 11:57
BEWARE:Sector 14 Market, Gurgaon - Vehicle theft rampant New.Novice Shifting gears 9 12th May 2011 20:15
Commercial vehicle dealerships! raj_5004 Commercial Vehicles 1 9th April 2010 17:45
Commercial Vehicle Thread nitrous Commercial Vehicles 2151 13th January 2010 07:23

All times are GMT +5.5. The time now is 05:43.

Copyright 2000 - 2016, Team-BHP.com
Proudly powered by E2E Networks