Recording over 40% in sales during FY23 on back of robust demand, VECV targets 23% growth in FY24

Volvo Eicher Commercial Vehicles (VECV), which sold 79,623 vehicles in fiscal year 2023, a 40 percent increase year on year (YoY), has set an internal target of 97,862 units in fiscal year 2024. If the plan of action is implemented, it will result in a 22.90 percent growth in the current fiscal year.

In a letter sent to its suppliers on Thursday, VECV’s top management announced that it aims to roll out 3950, 3533, and 3700 units of light and medium duty trucks (LMD) in the months of April, May, and June, respectively. Furthermore, it will raise LMD manufacturing to 11400, 12600, and 11500 units in Q2, Q3, and Q4 of FY24, totaling 46683 units.

For the bus segment, the goal is to deliver 2500, 2860, and 2300 units in April, May, and June. Going ahead, the company expects to produce 4500, 4200, and 7800 units in Q2, Q3, and Q4 of the current fiscal year, for a total of 24160 units.

VECV surpassed Tata Motors to take second place in the large buses market in December, owing to the economy’s opening up and the extremely high demand for last-mile public transportation. The company’s top management feels that the new high for big buses in FY19 is still a couple of years away due to financing challenges experienced by operators, as several of them do not have a solid credit score, which was impacted during the epidemic. Smaller and medium buses, on the other hand, have seen strong demand from schools, offices, and other sectors.

Similarly, for heavy-duty vehicles, the aim is to produce 2050, 1979, and 2290 units during the months of April, May, and June. Furthermore, the company will produce 6200, 6500, and 8000 units in Q2, Q3, and Q4 of FY 2024, bringing the total to 27019 units.

According to analysts, fast tracking of infrastructure projects, continued growth in the e-commerce and logistics segment, government infrastructure spending and schemes such as PLI, Gati Shakti, and the National Infrastructure Pipeline (NIP), as well as the China plus 1 strategy, will continue to benefit in spurring demand for commercial vehicles in the country. 

VECV, which is a joint venture with Sweden’s AB Volvo, makes and sells a wide range of Eicher-branded trucks and buses, as well as Volvo trucks in India, engines for the Volvo Group, engines for non-automotive uses, and Eicher component businesses. Its integrated manufacturing plant in Pithampur, Madhya Pradesh, is also the global hub for medium-duty 5- and 8-liter engines for Volvo Group. In 2020, VECV signed definitive agreements to integrate Volvo Buses India into VECV, including the manufacture, assembly, distribution, and sale of Volvo Buses in India.

The targets from VECV  come even as the World Bank and Asian Development Bank (ADB) cut their economic growth forecasts for India by 30 basis points and 80 basis points, respectively, to 6.3 percent and 6.4 percent, citing risks from global and domestic headwinds. According to the World Bank, the country’s real GDP is expected to decline from 6.9 percent in FY23 to 6.3 percent in FY24 due to the lag impact of monetary policy tightening, increased growth uncertainty, and reduced government spending. This may lead to local consumption constraints. The World Bank also warned that lower-income consumers’ spending will be hit in FY24 due to slower income development. Also, any weather-related shocks, like too much or too little rain or changes in temperature, will put more pressure on the RBI to raise interest rates.

The ADB, on the other hand, said that any worsening of the geopolitical situation is likely to put more downward pressure on global demand and increase uncertainty, which could slow India’s growth rate and drive up inflation. It stays more lenient on domestic prospects, predicting strong growth in FY24 and FY25.