In India, the commercial vehicles segment is divided between Light Commercial Vehicle (LCVs) and Medium & Heavy Commercial Vehicles (M&HCVs) based on tonnage. Vehicles with Gross Vehicle Weight (GVW) below 7.5T are classified as LCVs, whereas vehicles with GVW above 7.5T are categorized as M&HCVs.
On the basis of fuel used, vehicles can be classified as diesel, petrol or CNG driven vehicles. Diesel vehicles are economical and more popular in India. Petrol vehicles have strong niche in hilly/ cold areas where vehicles require a cold start.
LCVs are categorized as N1 vehicles, which are cargo vehicles with a gross vehicle weight (GVW) of less than 3,500 kg. There are also M2 vehicles, passenger vehicles with more than nine seats and a GVW less than 5,000 kg. There is currently no fuel consumption regulation for either of these vehicle segments in India. The CVs are compared, based on price per payload vice-versa operating cost of the vehicle.
The LCV market, while smaller when compared to the medium and heavy commercial vehicles in terms of value, is significant in volume.
Why are LCVs popular in India?
LCVs are used in India as last-mile connectivity for goods. These small trucks, because of their easy manoeuvrability, are ideal for intra-city transport of goods.
Demand analysis: The important factor for evaluating production or demand will be vehicle ton produced/ sold, rather than number of vehicles .The M&HCV Industry has been seeing strong demand conditions powered by constant replacement demand and initial fleet expansion due to positive market sentiments.
Growth was driven by volume expansion across all application segment. In FY 2016, CV Industry grew by 12%, M&HCV segment grew in the double-digit of 30%, LCV segment is almost flat by registering 0.30% growth. On the other hand, LCV segment continues to weaken. Tata Motors is the market leader in Commercial vehicle segment with more than 44% in FY 2016.
Source: Report on “Indian Commercial Vehicle Strategy Analysis FY 2016” by Autobei Consulting Group, April 2016