With over-capacity built up, truckers refused to respond to the economic stimulus offered since December by way of 50 per cent depreciation allowance and 43 per cent cut in excise duty on trucks. Hence truck sales crashed in March by 49.22 per cent, with cumulative slump in sales by 38.69 per cent in 2008-09, according to the monthly report of the Indian Foundation of Transport Research and Training (IFTRT).
Repossessed goods carriages numbering over 25,000 with auto finance firms / banks on account of loan default by truckers continued to be available for resale. This has posed direct competition to new trucks as they are less than two years old. At the same time, automobile dealers / manufacturers have been left with three weeks’ inventory as against two weeks normally held in the last quarter of a fiscal.
The year 2008-09 witnessed a fall of 38.69 per cent in truck sales to 164,518 trucks (5 ton-49 ton category) from 268,360 units the previous year. The maximum drop was in sales of 16.2 ton and 25.2 ton heavy trucks and 30-49 ton tractor trailers as it plummeted to 41,529 units, 68,361 and 9,917 in 2008-09 against 50,445, 110,576 and 25,685 units the previous year.
The entry of new players in business has virtually dried out in the last 5-6 months because truck operators hardly see any sign of recovery in the manufacturing sector in the near future and a consequent increase in cargo offerings. In fact, the replacement cycle of truckers operating on trunk routes has been extended to 6-7 years, and hence further fleet expansion is ruled out.
After the stimulus package failed to boost truck sales, vehicle manufacturers are understood to be seeking a commercial vehicle scrappage policy by the Government to remove 10-year-old trucks from Indian roads, irrespective of the health of a truck / bus. The main plea is that older trucks cause more air pollution and therefore require to be “culled” through a process of “mercy killing”. Even one or two-year-old goods carriages in the country are generally spitting foul air with rampant overloading of cargo in excess of their prescribed gross weight limit.
The health of the Indian trucking industry can be restored by effectively combating the menace of overloading rather than hunting for a kill to enhance truck sales by advancing dubious arguments to modernize the Indian fleet. It is learnt that truck operators are firmly opposed to any irrational move to scrap old trucks on the basis of age rather than the health of the vehicle.
Truck rentals move up
Meanwhile, the report also pointed out that improved cargo offering due to healthy arrival of summer fruits, vegetables and wheat procurement led to a surge in truck rentals by five-six per cent during March 7-April 6, along with a 56.35 per cent drop in new addition of truck fleet in the last six months.
While the November-January 2009 quarter witnessed a 19-25 per cent drop in truck rentals on trunk routes, February witnessed a range-bound movement of truck rentals. There was an improvement in truck rentals with a substantial increase in cargo offering due to heavy arrivals of summer fruits, vegetables and wheat procurement.
It is noteworthy that after a sustained double-digit growth in trucks and trailers since 2001-02, the fiscal 2008-09 witnessed a 39 per cent drop in truck sales as only 164,518 units were sold as against 268,360 units in fiscal 2007-08.
In addition, the unprecedented repossession of delinquent vehicles to the tune of 28,000-30,000 units also took away significant fleet from the market, and thereby the combined and cumulative impact of drop in truck sales and repossession of trucks reduced the pressure on the truck freight market.
Repossessed goods carriages numbering over 25,000 with auto finance firms / banks on account of loan default by truckers continued to be available for resale. This has posed direct competition to new trucks as they are less than two years old. At the same time, automobile dealers / manufacturers have been left with three weeks’ inventory as against two weeks normally held in the last quarter of a fiscal.
The year 2008-09 witnessed a fall of 38.69 per cent in truck sales to 164,518 trucks (5 ton-49 ton category) from 268,360 units the previous year. The maximum drop was in sales of 16.2 ton and 25.2 ton heavy trucks and 30-49 ton tractor trailers as it plummeted to 41,529 units, 68,361 and 9,917 in 2008-09 against 50,445, 110,576 and 25,685 units the previous year.
The entry of new players in business has virtually dried out in the last 5-6 months because truck operators hardly see any sign of recovery in the manufacturing sector in the near future and a consequent increase in cargo offerings. In fact, the replacement cycle of truckers operating on trunk routes has been extended to 6-7 years, and hence further fleet expansion is ruled out.
After the stimulus package failed to boost truck sales, vehicle manufacturers are understood to be seeking a commercial vehicle scrappage policy by the Government to remove 10-year-old trucks from Indian roads, irrespective of the health of a truck / bus. The main plea is that older trucks cause more air pollution and therefore require to be “culled” through a process of “mercy killing”. Even one or two-year-old goods carriages in the country are generally spitting foul air with rampant overloading of cargo in excess of their prescribed gross weight limit.
The health of the Indian trucking industry can be restored by effectively combating the menace of overloading rather than hunting for a kill to enhance truck sales by advancing dubious arguments to modernize the Indian fleet. It is learnt that truck operators are firmly opposed to any irrational move to scrap old trucks on the basis of age rather than the health of the vehicle.
Truck rentals move up
Meanwhile, the report also pointed out that improved cargo offering due to healthy arrival of summer fruits, vegetables and wheat procurement led to a surge in truck rentals by five-six per cent during March 7-April 6, along with a 56.35 per cent drop in new addition of truck fleet in the last six months.
While the November-January 2009 quarter witnessed a 19-25 per cent drop in truck rentals on trunk routes, February witnessed a range-bound movement of truck rentals. There was an improvement in truck rentals with a substantial increase in cargo offering due to heavy arrivals of summer fruits, vegetables and wheat procurement.
It is noteworthy that after a sustained double-digit growth in trucks and trailers since 2001-02, the fiscal 2008-09 witnessed a 39 per cent drop in truck sales as only 164,518 units were sold as against 268,360 units in fiscal 2007-08.
In addition, the unprecedented repossession of delinquent vehicles to the tune of 28,000-30,000 units also took away significant fleet from the market, and thereby the combined and cumulative impact of drop in truck sales and repossession of trucks reduced the pressure on the truck freight market.
The trucking industry does not seem to be very optimistic about economic recovery without adequate investments in both the infrastructure sector and house building. Truck transport is dependent on derivative demand, and therefore its health remains fragile in direct relation to economic growth or degrowth.
