Truck sales seen slowing from November as demand stagnates2 min read . Updated: 29 Sep 2017, 06:19 AM IST
Truck sales rose in the last couple of months but the rally may be short-lived as the slowing Indian economy makes its impact, say analysts
Mumbai: It’s been a very dull start to the festive season for Inderbir Singh, a New Delhi-based transporter who has a third of his 85-truck fleet idling.
“There’s no excitement in the market," said Singh, pointing out that cargo has nearly halved in a festive month when there is usually more demand than one can handle.
“The goods and services tax (GST) has been a big blow for business," he said, adding that as most transporters are unorganized, they continue to struggle with the new system.
With transporters such as Singh who make up a large share of the market finding it tough to put their fleets to optimum use, truck sales, particularly of the heavy variety, are expected to hit a speed bump from November.
India’s economic growth slowed to 5.7% in the June quarter, a three-year low, underlining the disruption caused by the uncertainty related to the rollout of GST, even as it is yet to fully recover from the impact of demonetisation.
Truck sales rose in the last couple of months but the rally may be short-lived as the slowing economy makes its impact, said analysts. After a bad first quarter, when sales of medium and heavy trucks slipped 32% on back of a switch to tougher emission standards, volumes rose 6.68% and 42%, respectively, in July and August. While the uptrend is expected to continue in September and October, propped up by the festive season, consumption is likely to slow from November, weighing on truck sales, said analysts and transporters.
For the year that ends in March, Crisil Ltd estimates that the overall truck and bus market will grow only 4-6%. Within that, sales of heavy trucks will fall by an estimated 2%, said Binaifer Jehani, director, research, Crisil, attributing it to weak replacement demand and a moderation in freight volumes.
Vinod Aggarwal, managing director and CEO at Volvo Eicher Commercial Vehicles Ltd, the third largest truck maker, said the near-term outlook for the market looks good. He refused to offer a guidance on the demand scenario after the festive season, but conceded that smaller operators are staying off the market. “Most of the demand currently is coming from large fleet operators," said Aggarwal, adding that these operators are modernizing their fleets on account of changes in logistics and warehousing requirements following the implementation of GST.
Spokespersons at truck market leader Tata Motors Ltd and Ashok Leyland Ltd declined to comment for this story.