The sales of medium and heavy commercial vehicles fell 23 per cent in 2012-13, in spite of the steep discounts on offer. Quarter after quarter, the performance of the industry worsened. In the first quarter of the financial year, sales decreased eight per cent; they then fell 12.9 per cent in the second quarter, 31.8 per cent in the third quarter and 32.7 per cent in the fourth quarter. Commercial vehicles, along with steel and paint, have for long been a good indicator of the state of the economy. So the decline in numbers, the steepest since 2008-09, the year of the global financial meltdown, is symptomatic of the current economic slowdown. Not all commercial vehicles are doing badly, though. Unlike medium and heavy commercial vehicles, which are used to move goods over long distances, the market for light commercial vehicles, which are used largely for last-mile or intra-city transport, is doing well - it expanded 14.04 per cent in 2012-13. Still, total commercial vehicle sales (medium and heavy as well as light) fell two per cent during the year.
The manufacturing sector accounts for almost 70 per cent of annual truck sales. The latest data on the index of industrial production released last week by the government showed that manufacturing grew just one per cent in April-February 2012-13, down from 3.7 per cent in the same 11 months of the previous year. Mining contracted 2.5 per cent during the period. The slowdown has impacted the Railways too: its freight traffic grew just four per cent in 2012-13; that growth too, some experts say, happened only because of the high import of coal. (Total freight earnings for the year would fall 3.78 per cent short of the target, Railway Minister Pawan Kumar Bansal told Parliament on February 26 while presenting the Railway Budget for 2013-14.) The import of the numbers is that there aren't enough goods to carry around. As a result, fleet utilisation of truck owners has fallen 15-25 per cent and rentals have softened 7-8 per cent. And this has happened when a new player, Daimler, has entered the market with ambitious plans - it wants to launch a truck every month for the next year and a half.
Another factor that dampened truck sales is the fact that almost 80 per cent of the market is dependent on truck owners replacing their worn-out old vehicles with new ones. The overall economic slowdown has made them cautious. According to truck makers, most fleet owners have deferred sales by eight to 10 months. In 2008-09, truck owners had bought trucks in large numbers just before the slump; as a result, their investments turned bad in no time. Truck financiers saw a huge pile-up of bad loans. Those memories are still fresh and everybody is wary of falling into that debt trap once again. The market is not likely to improve unless the investment sentiment in the country improves. Only when industry produces more output, mines more minerals and coal, lays more roads, and sets up more factories and power plants will the demand for commercial vehicles pick up.
