Review on vehicle scrappage policy: Used truck mkt prices spike up to 21%

This comes at a time when truck rentals, a key barometer of goods movement, remained firm in September as pre-festive stocking continued across India

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The Delhi-Bengaluru-Delhi and Delhi-Mumbai-Delhi routes also recorded moderate growth, with increases of 1 per cent and 0.7 per cent, respectively | (Photo: Shutterstock)
Shine Jacob Chennai
4 min read Last Updated : Oct 07 2024 | 8:28 PM IST
With the government reviewing its vehicle scrappage policy, the price of used trucks has surged by up to 21 per cent in certain segments. The rise in used-market prices is also driven by demand from the government’s infrastructure projects, say industry sources.

The price of used commercial vehicles (CVs) in the 1.5-2 tonne category (which includes Tata Ace, Ashok Leyland's Dost, and Mahindra Treo) registered a 21 per cent year-on-year (Y-o-Y) increase. This was followed by a 12 per cent rise in the 7.5-16 tonne category, also known as intermediate commercial vehicles, which are larger than light commercial vehicles, and more powerful than heavy-duty trucks. However, prices fell by 16 per cent in the 16-19 tonne category, which is dominated by Tata and Eicher.

The government is reviewing its vehicle scrappage policy, which mandates the scrapping of vehicles of over 15 years. This could be amended to focus on emission levels rather than the age of the vehicle.

“There is a surge in demand for the used truck segment of late,” said Shenu Agarwal, managing director and chief executive officer, Ashok Leyland.

This comes at a time when truck rentals, a key barometer of goods movement, remained firm in September as pre-festival stocking continued across India. Freight rates held firm without much increase as fleet utilisation levels surged to 90 per cent, the highest in recent times from 70 per cent. Truck rentals on the Bengaluru-Mumbai-Bengaluru route saw the highest increase at 1.6 per cent, while the Kolkata-Guwahati-Kolkata route remained unchanged.

The Delhi-Bengaluru-Delhi and Delhi-Mumbai-Delhi routes also recorded moderate growth, with an increase of 1 -0.7 per cent, respectively. The approaching festival-season demand for more CVs, resulting in increased sales of new commercial vehicles, is reflected in the fact that sales of goods carriers, e-rickshaw with carts, and three-wheeler (goods) vehicles showed an upward trend, the report said.

Y S Chakravarti, managing director and chief executive officer of Shriram Finance, said: “Truck owners caution that an increase in freight rates is imminent as tyre prices and toll charges have risen in the past few weeks. Fleet operators are also seeking a cut in fuel prices, which could blunt any freight rate increase. We anticipate the upcoming festival season will provide a much-needed boost for passenger vehicle sales.”

When asked about the rise in demand for used trucks, C S Vigneshwar, president of the Federation of Automobile Dealers Associations (Fada), said: “There is high demand for trucks. Because vehicles are not readily available, second-hand prices have gone up. Due to all the infrastructure projects, bulk purchases are happening. OEMs have enough capacity to increase production.”

In the used-passenger vehicle market, Maruti Baleno and Maruti Dzire registered positive sales growth of 8 per cent and 7 per cent Y-o-Y, respectively, while other segments continued to face downward pressure. The same held true for used two-wheeler sales, with a decline across most brands.

In new passenger vehicles sales, motor car sales saw a decline of 20 per cent on Y-o-Y basis, and two-wheeler sales saw a decline of 8 per cent versus September last year. This could possibly be attributed to a wait-and-watch stance by potential buyers, with the upcoming festive season expected to drive demand across both segments, the report said.

The woes of the EV segment seem to be continuing despite various initiatives introduced by the government to boost sales. Buyers seem to be taking a cautious approach, as seen from the fact that sales of two-wheeler EVs declined by 44 per cent (Y-o-Y) and four-wheeler EV sales by 43 per cent.

In September 2024, petrol consumption decreased by 6 per cent M-o-M, while diesel consumption dropped by 2 per cent. Although FASTag volumes declined by 3.2 per cent, overall toll revenues increased due to higher toll charges. E-way bill generation remained flat M-o-M in August 2024 but posted a 13 per cent increase Y-o-Y. “As the Indian economy gears up for the festive season, the trucking industry is poised for further growth, driven by increased demand and improving market sentiment,” the Shriram Mobility Report said.

Topics :Vehicle scrappingVehicle scrap policytruck market

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