The Indian truck market suffered a negative growth for the eleventh month in a row in January as fleet owners' postponed replacement purchases were weighed down by costlier lending rates and weak freight demand.
With supply outstripping the current requirement of truck services in the country coupled with a sharp dip in resale value of used trucks by as much as 30%, several truck owners are forced to delay purchase of new trucks.
This, along with stagnant freight rates over the last two months and dip in demand for tippers and mining trucks due to closure of mines at various locations in the country, resulted in a significant drop in new truck demand.
Mumbai-based Tata Motors, India's largest commercial vehicle manufacturer, posted a 52% drop in sales medium and heavy commercial vehicles (MHCV) last month, its biggest monthly fall in four years at 8,722 units as against 18,338 units sold in the same month last year.
Meanwhile Chennai-based Ashok Leyland, the country's second biggest CV producer, reported a fall of 25% in the same month selling 6,863 units as compared to 9,200 units of MHCVs sold corresponding month last year.
"The overall industry truck sales crashed by 38% during January, despite availability of new year models in all categories and huge allurements from commercial vehicle dealers in form of large discounts ranging Rs 80,000 to Rs 200,000 per vehicle and subvention to banks NBFCs to keep low EMIs on truck finance to encourage purchase of new vehicles by fleet owners", Indian Foundation of Transport Research and Training (IFTRT) said in a report.
The demand drop did not spare even the new and relatively smaller entrants. Mahindra & Mahindra along with Navistar, which has been trying to gain a foothold in the heavy truck market, saw a drop of 34% in January to 1,024 units as against 1,543 units.
"Over 56 lakh trucks are plying on Indian roads today. The demand for new trucks has been weak since the past several months because existing trucks are more than enough to take care of the current requirements. Therefore people who bought their trucks with the idea of upgrading in four years are not doing so because there is no need for that", said an analyst.
The manufacturing sector, particularly SME units, in disarray due to low demand of their products and consequent lower cargo offerings from manufacturing units has forced the truck operators to put on hold the new purchases and truckers are continuing to hold on to their old vehicles.
Tata Motors had to shut production for the fourth time this year at its truck manufacturing unit in Jamshedpur. The company had shut down the Jharkhand-based plant in the first quarter of the year followed by two more shutdowns undertaken in November followed by one last month. It had done so to avoid piling up of inventory with its dealers.
Bus market leader Ashok Leyland is having a five-day week at its production facilities as against the normal six-day week since December. The move is aimed at cutting production and saving on wages.
As per data provided by the Society of Indian Automobile Manufacturers sales of MHCV trucks dropped by 22% at 164,269 units during the period April-December as compared to 211,177 units sold in the same period last year.
