Commercial vehicle industry to recover through infrastructure projects in CY25, says Volvo Eicher

After a sluggish calendar year in 2024 for the commercial vehicle segment, the industry is expected to grow faster due to government support and infrastructure projects in CY25, said a top official at Volvo Eicher Commercial Vehicle (VECV) in an interaction with Business Today. 

“Despite the significant allocation of money by the government on the capex and infrastructure projects, the ground-level situation was that the (infrastructure) spends have been not to the extent it would have happened in the normal course. I think that has started happening now,” says Vinod Aggarwal, MD & CEO, of Volvo Eicher Commercial Vehicle and the immediate past president of SIAM (Society of Indian Automobile Manufacturers).

“The government is very keen to break up all the shortfalls and capex spending in the last quarter. We will see more traction coming from the interest expense. I'm sure the government will continue focusing on the interest returns and allocate more money in the coming budget. So that is one reason why the commercial vehicle industry will continue to have a good future based on the infrastructure projects,” he added. 

Notably, VECV aims to grow faster than the industry, according to Aggarwal.  VECV is a 16-year-old joint venture between the US-based Volvo Group and domestic commercial vehicle manufacturer Eicher Motors, which manufactures heavy-duty commercial vehicles. 

As per Aggarwal, VECV’s market share in light and medium-duty trucks currently stands at 36%. In heavy-duty vehicles, the company’s market share currently stands at 10%. The company’s market share in the heavy bus segment stands at 21% and in the light and medium buses, VECV’s market share stands at 24%, discloses Aggarwal. “We are continuously growing our market share. We have grown almost 10x in our top line. So that is what our track record is. We would like to keep this track record. We would like to become a very significant player in the commercial vehicle segment based on our joint venture strength and operation areas. So, the potential for us is very large,” says Aggarwal. 

According to Sofia Frändberg, Chairperson, VECV, India is a key market for the Volvo Group. “India is a very important market, and we are very excited looking ahead for the future. We strongly believe in good development both for India, and India for the world. So, India has high focus and attention for the Volvo Group,” says Frändberg. 

In FY24, VECV’s revenue from operations stood at Rs 21,868 crore, witnessing a growth of 15.38% as against Rs 18,952 crore in FY23. The company’s EBITDA grew by 25.27 % to Rs 1,715 crore in FY24. 
Going ahead, the heavy-duty truck segment will be a key area of interest for VECV, as per Aggarwal. “We are still at around 10% (in terms of market share) for the heavy-duty truck segment. Heavy-duty trucks constitute a very large market, both in terms of numbers and value because the truck costs are prices are very high. It is an essential part of the commercial vehicle industry. So, there we have huge growth potential,” notes Aggarwal.

Notably, VECV forayed into the 2.5-3 tonne small commercial vehicle category by launching its first electric vehicle for last-mile delivery. “2 to 3.5 tonne is the largest segment of the commercial vehicle market. This segment is more than 300,000 units, which means this segment constitutes more than 30% of the overall commercial vehicle industry. Now we are entering this segment with our two electric vehicles in line with our sustainability,” says Aggarwal. 
Apart from electric vehicles, the company also has LNG products in its portfolio. Despite a growing debateabout the presence of diesel powertrains in the heavy and commercial vehicle segment, VECV remains committed to “fossil fuel-free products,” according to Frändberg.

“We have been very clear from the Volvo group standpoint that we believe that, of course, the shifts will have to happen, and it will come and there will need to be different options, electric vehicles, fuel cell vehicles, and alternative fuels. So, our sort of strategy is to develop products in all these areas. Our mission is to provide only fossil-free products in the future. The shift is not happening as fast as we would have wanted it to, but it will come,” says Frändberg.