Announcing that there will be multiple headwinds in the near term for heavy truck sector, analysts at Kotak Institutional Equities, in their report on ‘Automobiles’, have claimed that the domestic truck industry is likely to grow in low single digit during FY2018-20. They attribute this to low road freight demand, improvement in truck fleet utilisation led by market share gains by large fleet operators and implementation of GST, and due to deterioration in profitability of truck operators on the back of hardly any increase in truck freight rates. The truck industry, the report mentions, could grow at a higher pace upon scrappage policy backed replacement demand. As per an analysis of the past 16-year data of domestic truck industry, which indicates seven-per cent CAGR growth over FY2000-16 growth of eight-per cent CAGR in road freight demand, the implementation of GST poses a big threat to the truck industry, the analysts have claimed. They point at a 1.5 per cent annual improvement in truck fleet utilisation. Their contention is, the logistics sector will become more organised, and toll booths at highways will become computerised. This will lead to faster improvement in truck fleet utilisation, and make it difficult to ascertain the extent to which truck fleet utilisation will improve. Highlighting industry fragmentation, the analysts have mentioned that it is difficult for overall fleet utilisation to improve beyond 80 per cent. They point out, that road freight demand is growing at a mere 5 per cent CAGR.