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COVID-19 Growth Impact Assessment for the Commercial Vehicle Industry

COVID 19 Growth Impact Assessment for the Commercial Vehicle Industry

Published on : Nov-2022

Commercial vehicle is any form of motor vehicle used for the transport of goods or the payment of passengers. The commercial vehicle market can broadly be classified as light commercial vehicles (LCVs), heavy goods vehicles, and buses and coaches. The growth of the automotive sector in emerging markets and the creation of commercial logistics operations contributed to a substantial demand for commercial vehicles in 2019.

The growing number of construction and e-commerce activities has increased demand for material transport, which, in turn, has increased sales of commercial vehicles worldwide. The move to electric vehicles is expected to provide growth opportunities for the market being studied. The introduction of strict emission regulations has prompted car manufacturers (OEMs) to move towards electric vehicles.

Source: OICA

According to a report by Fatpos Global, coronavirus outbreaks have also had a major effect on the commercial vehicle (CV) industry. Original equipment manufacturers (OEMs) and parts suppliers have yet to return to full manufacturing capability, except for a few Asian countries that have recovered from the pandemic. Much of the world witnessed broken supply chains, financially exhausted small and medium-sized businesses, and declining car sales in Q1 2020. Output shutdowns due to national closures in March and April may result in a spillover impact in Q2. Growth is increasing the problems facing the CV industry, including tighter controls of tailpipes and greenhouse gas legislation across regions.

OEMs will pursue different ways to get consumers back to the fleet as the impact of the pandemic continues to fade and the industry recovers. Strategies involve rapid service response teams to ensure vehicle uptime and on-site support operations. OEMs would also boost revenues from aftermarket opportunities, such as delivering predictive maintenance and increasing mobile service operations. Increased investment in digital technologies and integrated applications would further improve the customer experience. In the near term, there will also be a strong emphasis on sustainable manufacturing practices to ensure the safety of the workers. Commercial vehicle manufacturers in India are projected to incur a huge net loss of Rs 6,000 crore in the current financial year, with the amount likely to hit its lowest point in a decade after two consecutive years of strong growth.

“In the April-June period of the financial year 2021, as per data, the total CV (commercial vehicle) sale in India stood at 31,636, a decline of 85 percent year-on-year as the country remained in the Coronavirus-induced lockdown for the most of the June quarter and, most of the trade and business activities coming to a temporary halt. A 30 percent decline in sales volume on an already weak base would lead to a nearly six-fold increase in a net loss to Rs 6,000 crore for commercial vehicle makers.”

-         The Economic Times

Source: International Energy Agency

Statistics above include passenger and commercial light-duty vehicles, it is observed that in Q1, 2020 worldwide sale of vehicles was about 32 million and 41 million in Q2, 2020 respectively.

“In the United States, it took seven years for US car sales to reach pre-crisis levels. We currently expect overall car sales in 2020 to be around 15% (or 13 million cars) lower than in 2019, with the largest drops registered in Europe, the United States, and China. This represents a historic drop twice the size of the decline that occurred between 2008 and 2009.

-         International Energy Agency

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