Pictured is the Mumbai Skyline in India. - Photo: Deepak Gupta/Wikimedia Commons

Pictured is the Mumbai Skyline in India.

Photo: Deepak Gupta/Wikimedia Commons

Commercial vehicle sales volumes are expected to contract for the rest of the year and into 2021 as a result of the COVID-19 pandemic, according to ICRA Limited, an independent and professional investment information agency.

The commercial vehicle space is expected to see 8% - 10% contractions over the next year, as the result of the pandemic slowing economic growth, in addition to overcapacity in the commercial vehicle ecosystem and other challenges that are being exacerbated now, ICRA said.

"The demand headwinds are expected to continue over the near-term given the macroeconomic challenges in view of the recent pandemic outbreak coupled with weakening financial profile of fleet operators and significant price hikes because of transition to BS-VI emissions norms,” ICRA said. Bharat Stage VI (BS VI) is the new emission standard that all vehicles in the country will have to adhere to, which started April 1, 2020, by utilizing vehicles that run on cleaner diesel and petroleum. The sale of BS-IV vehicles also ceased on that day.

The spread of the coronavirus pandemic has had a significant impact on the movement of goods and freight availability, and may continue over the near term, said ICRA Vice President Shamsher Dewan.

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