Low fuel prices may have improved fleet operator cash flows and collection efficiency of CV financiers, it is yet to help some of the CV segments to recover. The LCV segment continues to drag even though further deterioration in asset quality indicators is unlikely. LCV segment’s prospects continue to be influenced by overcapacity issues and constrained financing environment amidst rising delinquencies. Growth prospects over the medium-term are intact, steady demand for LCVs is likely to come from further proliferation of ‘Hub and Spoke’ logistics model as GST is implemented; from relatively untapped potential in semi-urban and rural areas; improving urbanization levels and emergence of SCVs, which would present attractive employment opportunities for first time buyers.

According to an ICRA report, M&HCV (Trucks) industry is expected to grow between 19 and 21 per cent in FY16 on the basis of improving fleet operator viability and replacement-led demand. Pre-buying ahead of the implementation of BS IV emission norms and ABS may have reflected a 35.1 per cent growth in M&HCV (Truck) segment in the first half of the current financial year, the demand for road logistics hasn’t improved meaningfully.