The commercial vehicle industry in India has been experiencing significant shifts in recent times. With rising demand across logistics, construction, and e-commerce sectors, businesses are investing more in transportation solutions than ever before. However, purchasing a commercial vehicle involves substantial upfront expenses, making commercial vehicle financing an essential tool for businesses. In this blog, we delve into the future of commercial vehicle financing in India and the top trends to watch out for in 2025.
Commercial Vehicles Market in India
The commercial vehicle market in India has shown noticeable growth in the recent past. According to the Society of Indian Automobile Manufacturers (SIAM), commercial vehicle sales increased from 9.62 lakh units to 9.68 lakh units in FY 2023-24. Similarly, sales of medium and heavy commercial vehicles rose from 3.59 lakh units to 3.73 lakh units during the same period. This growth is driven by the expanding logistics, construction, and e-commerce sectors, which are increasingly reliant on efficient transportation solutions.
Trends to Watch in 2025
As the commercial vehicle financing landscape evolves, several key trends are emerging that will shape the industry in the coming years. Here are the top trends to watch in 2025.
Rise of Green Financing Options
Green financing refers to loans that are designed specifically for eco-friendly vehicles. These loans are often offered at subsidised interest rates, with flexible repayment options and various other tax benefits. As the world moves towards sustainable living, numerous financial institutions have started offering green financing options. Additionally, the government is also rolling out new subsidies or incentives for businesses that choose electric or low emission commercial vehicles.
Impact of Technology on Loan Processing
Advancements in technology have transformed almost every industry including the commercial vehicle financing sector. Digital lending platforms, AI-based risk assessments and automated KYC processes have made everything quicker and more efficient. You can now apply for a loan digitally, upload documents and track your application status in real-time. Loan approvals, which once took weeks, now gets done within in minutes. It may be safely said that in 2025, digital tools will continue to play a major role in commercial vehicle financing.
Changes in Interest Rates and Lending Policies
Interest rates and lending policies are often impacted by changes in economic conditions. They are usually influenced by factors like inflation, RBI regulations and global economic trends. While there may not be any extreme hikes, lending institutions will keep adjusting rates based on market conditions.
However, one noticeable shift in this regard is the steady move towards more borrower-friendly policies. Lenders now understand the diverse needs of businesses. Therefore, they are creating flexible loan structures with custom tenures, seasonal EMIs and repayment holidays.
Increasing Popularity of Leasing vs Buying
Traditionally, businesses preferred to own their own commercial vehicles. However, with the rising popularity of the leasing concept there has been a sharp shift. It offers greater flexibility and reduces the financial burden on businesses. When a business leases a vehicle, they can easily upgrade to a newer model once the lease ends. This is specifically useful in sectors where vehicles face heavy usage and wear.
Predictions for the Commercial Vehicle Market
Reflecting on the findings of SIAM and the emerging trends, the commercial vehicle market looks like it is headed for sharp growth in 2025. As the Indian economy strengthens and infrastructure projects pick-up pace, the demand for trucks, busses and delivery vans will increase. Additionally, the rise in e-commerce and delivery services will fuel this growth.
Medium and heavy commercial vehicles will likely see higher demand from construction, mining and logistics sectors. Financing will play a crucial role in supporting this growth. It is expected to see lenders launching sector specific loan products to meet the needs of different industries.
Also Read: Unlocking the Benefits of Commercial Vehicle Loans for Your Business
To Conclude
The future of commercial vehicle financing in India looks promising. With advancements in technology, growing interest in sustainable commercial transportation and evolving lending
models, the industry is gearing up for a transformation. By embracing new trends both lenders and buyers can drive the industry towards efficiency, sustainability and profitability.
Poonawalla Fincorp offers Commercial Vehicle Loan at an attractive interest rate with customer focused benefits such as easy application, minimal documentation, quick approval and flexible tenure of up to 60 months. Explore more on the Poonawalla Fincorp website.
Frequently Asked Questions
1.What are the benefits of leasing a commercial vehicle compared to buying one?
Leasing offers greater flexibility, reduces financial burden, and allows businesses to upgrade to newer models easily, which is beneficial for sectors with heavy vehicle usage.
2. How are lending institutions adapting to the diverse needs of businesses?
Lenders are creating flexible loan structures with custom tenures, seasonal EMIs, and repayment holidays to cater to the varied needs of businesses.
3. What role do digital tools play in commercial vehicle financing?
Digital tools enable online loan applications, document uploads, and real-time tracking of application status, enhancing convenience and efficiency.