Driving Towards SUSTAINBILITY
As the country is gearing up for its net zero goals, the commercial vehicles market is taking some big steps to bring down emissions and enhance productivity in the coming years. Construction Times finds out.
India’s commercial vehicle (CV) market has shown steady growth with leading players consolidating their presence in the market. According to ICRA, India’s CV industry is expected to see 7-10 percent growth in FY 2024. The development of e-commerce, back-to-school and office seasons, replacement demand, government infrastructure expenditure, and back-to-work scenarios would all contribute to the volume rise.
Prevailing market trends
The CV industry is growing at a steady pace. The truck and bus segment of the CV industry caters to different needs, reflecting the diverse demands of freight movement and human mobility. While truck demand is correlated to economic activity, bus demand is driven by the movement of school children, office staff, and other people using public transport. The construction and infrastructure sectors, vital to the economy, are experiencing rapid growth due to the government’s focus. This expansion is supported by transport solutions in construction and mining, improving productivity and quality, and reducing operating costs. Since 2020, the Indian domestic Medium and Heavy Commercial Vehicle (M&HCV) industry has been on a robust growth trajectory aiming to recover the momentum lost during the Covid-19 pandemic. The pent-up demand post-Covid has settled down largely. Better highway infrastructure, higher urbanisation and reach of e-commerce to rural India will continue to fuel the growth of the hub-and-spoke model.
Speaking about the trucks and tippers segment, Rajesh Kaul, Vice President & Business Head – Trucks, Tata Motors, says, “The demand trend for trucks and tippers in the construction, mining and logistics segments appears promising. Several factors are poised to drive growth in this sector. First, replacement purchases by fleet operators and increased government spending in industries like infrastructure and road construction are expected to be key contributors to the segment’s expansion. Additionally, this has led to a shift to higher tonnage nodes and increased production of core commodities. Furthermore, supporting commodities such as cement, steel and aggregates are anticipated to experience sustained growth, thereby driving some demand for trucks. The spending towards the completion of existing projects is likely to sustain the demand for tippers in the construction and logistics sectors.”
Nitin Jirafe, Engine Business Leader, Cummins India, provides an overview of the performance of truck market vis-à-vis the bus segment. “Following a robust resurgence in economic growth after 2020, the truck demand has experienced a sharp. In contrast, the demand for buses took longer to recover due to work-from-home policies, remote operations of schools, and avoidance of public transport. This shift was reflected in the contribution of buses which is typically ~10% of the overall medium and heavy commercial vehicles sold in India, which dropped to ~4% in FY21 and FY22. However, since then, the recovery for buses has returned to normal levels and is currently on a strong growth path.”
“In my view, the HCV segment of 16-30 ton would be limited for specific usages and thus would have a relatively lower growth. FY 24 is witnessing a consolidation in SCV business with negative YOY growth, however it would be back to moderate growth of 5-7% for FY 25,” says Amit Mohan, President and Head – Logistics, Infra, CV & CE Retail Loans and Working Capital, Kotak Mahindra Bank.
Going greener
At a time, when the global market is gearing up to net zero goals, every industry segment is adopting greener technologies and energy sources to reduce emissions and attain the goals of net zero. Kaul elaborates, “We have embarked on our sustainability journey under three pillars: viz. net-zero GHG emission by 2045, circularity and preserving biodiversity. We have charted a clear roadmap towards clean and commercially viable mobility solutions. We left a mark at Auto Expo 2023, by showcasing 14 vehicles and concepts, covering all zero-emission propulsion technologies across the portfolio, including Hydrogen ICE, Fuel-Cell-electric, Battery electric and natural gas fuel types. We have also adopted the Science Based Targets (SBTi) framework for GHG emissions reduction and are making rapid progress towards renewable energy.”
Tata Motors has also taken a firm step towards recycling old vehicles. Kaul adds, “We have launched Registered Vehicle Scrappage Facilities (RVSF) known as Re.Wi.Re – Recycle with Respect, marking a substantial move towards responsible scrappage of end-of-life vehicles. The facilities employ globally benchmarked and optimised recycling processes to maximise the value of scrap materials for future use and minimise waste for the greater good.”
From an engine’s perspective, Jirafe adds, “Cummins has developed fuel-agnostic internal combustion engines with wide fuel options from advanced diesel to low and zero-carbon fuels like CNG/LNG/Bio-CNG and H2; and zero-emissions solutions with fuel cell and battery electric systems.”
Electrification
The CV industry is experiencing a significant transition towards electrification. This sector is poised for expansion in the coming years due to favourable conditions, Government support and profitable unit economics. Both the Central and State Governments are backing EVs by providing incentives like the FAME II scheme, PLI scheme, road tax exemption and lower GST rates. According to Kaul, The electric vehicle growth story is expected to receive a major boost in India, backed by Government incentives in terms of subsidies and policy framework on one hand, and the rapid development of charging infrastructure on the other.
Looking at the EV adoption trends, Mohan elaborates, “We will see early adoption of EVs in buses backed by the state transport corporations. EVs currently have higher asset risk and it will take some time for the resale value to establish.”
Outlook positive
According to Kaul, the demand for trucks and tippers will remain robust, driven by a combination of factors, including government investments and the overall growth in capital-intensive industries. “This trend presents opportunities for companies operating in these sectors to capitalise on the increased demand for their products and services. Tata Motors is poised to cater to the demand of the customers in these segments with its technologically advanced mobility solutions. Our cutting-edge products with superior performance in key attributes such as total cost of ownership, comfort, and convenience continue to be the preferred choice of our customers across different segments and applications,” he adds.
With a focus on urban development and infrastructure creation, the market for commercial vehicles will go a long way in the coming years.
