Opportunities in Commercial Vehicles Dealership

Opportunities in Commercial Vehicles Dealership (Sale of Commercial Vehicles, Spares and Servicing)

Commercial vehicle is a kind of motor vehicle that is used for commercial purpose, not for private propose. A commercial vehicle carried goods and paying passenger for individual or business profit.

Some of the commercial vehicles are buses, box trucks, pickup trucks, semi-trucks, vans, coaches, trailers, travel trailers and taxicabs.

A commercial vehicle is any type of motor vehicle used for transporting goods or paid passengers or "commercial motor vehicle" as any motorized road vehicle, that by its type of construction and equipment is designed for, and capable of transporting. This means the tanks permanently fixed by the manufacturer to all motor vehicles of the same type as the vehicle in question and whose permanent fitting lets fuel be used directly, both for propulsion and, where appropriate, to power a refrigeration system.

As commercial vehicles may be fleet vehicles, company cars, or other vehicles used for business. Vehicles that are designed to carry more than 15 passengers are considered a commercial vehicle. A vehicle may be considered a commercial vehicle if it:

· Belongs to a company or corporation

· Is used for business, but is in an individual's name, such as a sole proprietor.

· Is a leased vehicle and in the name of the financial institution that owns it.

· Exceeds a certain weight or class.

· Is used to haul any hazardous material.

Market Outlook

India is the fourth-largest commercial vehicle market in the world, and it is also the fifth-largest manufacturer of commercial vehicles.

Commercial vehicles can be categorized into Light Commercial Vehicles (LCVs), Medium Commercial Vehicles (MCVs) and Heavy Commercial Vehicles (HCVs) according to the maximum load they can carry. LCVs gross vehicle weight limit is 7.5 tonne, whereas MCVs’ is 25 tonne and HCVs’ is 49 tonne.

India commercial vehicle market is projected to exhibit a CAGR of over 10% to reach $ 21.9 billion by FY2023, on account of increasing infrastructure development projects, growing logistics sector, ease of financing, etc. Moreover, commercial vehicles market is anticipated to become more lucrative, as new models and brands are rolled out in the coming years.

Light Commercial Vehicles

Indian automobile industry witnessed a growth of 32.86% in light commercial vehicles segment. Indian light commercial vehicles (LCVs) include a range of vehicles, such as cargo, tempo, mini trucks, buses, etc.

The total market of light commercial vehicles was estimated at Rs. 98 bn in 2007-08 which was an increase of 8% over that of preceding year.

India light commercial vehicles market is projected to surpass $ 6.8 billion by 2023. Anticipated growth in the market can be attributed to increasing number of infrastructure development projects, easy availability of vehicle financing schemes, and growing e-commerce and logistics sector. Moreover, implementation of BS IV standards, increasing demand for CNG and electric vehicles, launch of new models and foray of new brands in the Indian market are expected to positively influence the country’s light commercial vehicles market in the coming years.

Some of the major players operating in India commercial vehicle market are Tata Motors Limited, Ashok Leyland Limited, VE Commercial Vehicles Limited, and Force Motors Limited.

Light Commercial Vehicles

Demand : Past and Future
Year	(In '000 No.)
1990-91	56
2000-01	71
2001-02	64
2002-03	82
2003-04	108
2004-05	136
2005-06	170
2006-07	195
2007-08	260
2008-09	235
2009-10	330
2010-11	425
2011-12	520
2012-13	595
2013-14	460
2014-15	675
2015-16	725
2016-17	775
2017-18	850
2018-19	900
2019-20	980
2024-25	1475

Production in Indian light commercial vehicle (LCV) segment witnessed a growth of more than 20%. At present, there are 7 manufacturers in Indian LCV segment. With increasing demand for load carriers, a few manufacturers are expanding their capacity and some of them are setting up new plants. Some of the manufactures are also in the process of launching new models of LCVs.

Major players operating in India light commercial vehicles market are Tata Motors Limited, Ashok Leyland Limited, Mahindra & Mahindra Limited, VE Commercial Vehicles Limited, SML Isuzu Limited, Maruti Suzuki India Limited, Force Motors Limited and Piaggio Vehicles Private Limited.

Medium & Heavy Commercial Vehicles

Indian automobile industry witnessed a growth of 39.92% in medium & heavy commercial vehicle (MHCV) segment. Indian MHCV segment includes a range of vehicles such as cargo, trucks, buses, trailers, etc.

Global Commercial Vehicles Market

The global commercial vehicles market size was valued at USD 1.32 trillion in 2017 and is estimated to expand at a CAGR of 7.1% from 2018 to 2025. Although the market has been witnessing stagnant growth over the last few years, it is anticipated to recover with improved sales performance, particularly in emerging economies. Digitization along with increasing infrastructural spending is expected to elevate demand for commercial vehicles over the forecast period.

In addition, increasing penetration of electric commercial vehicles is also anticipated to contribute toward market expansion over the coming years. Adoption of electric vehicles (EVs) is primarily driven by need to meet emission reduction standards and regulations enforced by government bodies worldwide. Commercial vehicle telematics is another trend that is gaining traction and is anticipated to have a positive impact on the market over the forecast period.

The United States represents the largest and the fastest growing market worldwide with a CAGR of 5.9% over the analysis period. Asia-Pacific ranks as a production hub for commercial vehicles led by shifting of the automobile production base to low cost Asian countries. Rapid industrialization, development of road infrastructure, and steady rise in logistics, distribution and public transportation will drive growth in the region. The region is also expected to witness strong demand for buses encouraged by rapid urbanization and increasing need for safe and efficient public transportation in populous countries such as China and India.

The global commercial vehicles manufacturing market is further segmented based on type and geography.

By Type - The commercial vehicles manufacturing market is segmented into light commercial vehicle, heavy trucks, buses, coaches among these segments, the light commercial vehicle market accounts for the largest share in the global Commercial vehicles manufacturing market.

By Geography - The global commercial vehicles manufacturing is segmented into North America, South America, Asia-Pacific, Eastern Europe, Western Europe, Middle East and Africa. Among these regions, North America was the largest region in the global commercial vehicle market.

With increase in growing demand of goods transportation and increase in economy the scope and potential for the global commercial vehicles manufacturing market is expected to significantly rise in the forecast period.

Major players in the global Commercial vehicles manufacturing market include Daimler AG, Volvo Group, Man Truck & Bus, Hino Motors, Scania.

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Assumptions for Profitability workings	Plant Economics
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Working Capital Requirement Per Month Raw Material Packing Material Lab & ETP Chemical Cost Consumable Store
Overheads Required Per Month And Per Annum Utilities & Overheads (Power, Water and Fuel Expenses etc.) Royalty and Other Charges Selling and Distribution Expenses
Salary and Wages	Turnover Per Annum
Share Capital Equity Capital Preference Share Capital
Annexure 1:: Cost of Project and Means of Finance
Annexure 2:: Profitability and Net Cash Accruals Revenue/Income/Realisation Expenses/Cost of Products/Services/Items Gross Profit Financial Charges Total Cost of Sales Net Profit After Taxes Net Cash Accruals
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Annexure 8 to 11:: Sensitivity Analysis-Price/Volume Resultant N.P.B.T Resultant D.S.C.R Resultant PV Ratio Resultant DER Resultant ROI Resultant BEP
Annexure 12 :: Shareholding Pattern and Stake Status Equity Capital Preference Share Capital
Annexure 13 :: Quantitative Details-Output/Sales/Stocks Determined Capacity P.A of Products/Services Achievable Efficiency/Yield % of Products/Services/Items Net Usable Load/Capacity of Products/Services/Items Expected Sales/ Revenue/ Income of Products/ Services/ Items
Annexure 14 :: Product wise domestic Sales Realisation	Annexure 15 :: Total Raw Material Cost
Annexure 16 :: Raw Material Cost per unit	Annexure 17 :: Total Lab & ETP Chemical Cost
Annexure 18 :: Consumables, Store etc.,	Annexure 19 :: Packing Material Cost
Annexure 20 :: Packing Material Cost Per Unit	Annexure 21 :: Employees Expenses
Annexure 22 :: Fuel Expenses	Annexure 23 :: Power/Electricity Expenses
Annexure 24 :: Royalty & Other Charges	Annexure 25 :: Repairs & Maintenance Exp.
Annexure 26 :: Other Mfg. Expenses	Annexure 27 :: Administration Expenses
Annexure 28 :: Selling Expenses	Annexure 29 :: Depreciation Charges – as per Books (Total)
Annexure 30 :: Depreciation Charges – as per Books (P & M)	Annexure 31 :: Depreciation Charges - As per IT Act WDV (Total)
Annexure 32 :: Depreciation Charges - As per IT Act WDV (P & M)	Annexure 33 :: Interest and Repayment - Term Loans
Annexure 34 :: Tax on Profits	Annexure 35 ::Projected Pay-Back Period And IRR