While the dull truck sales in some months can be attributed to a high base, sector experts point out weak demand for goods is slowing sales.
By Kritika Arora
In more evidence that economic activity remains subdued, truck rentals have been trending down and fell by about 3-3.5% over the course of February despite an increase in the cost of diesel. In January too rentals — on average across the country — had fallen by about 1.5-2%. Diesel prices have been rising since end-December.
“With the real estate sector in a bit of a slump, the demand for materials such as steel and cement remains somewhat weak,” Umesh Rewankar, managing director, Shriram Transport Finance, told FE.
Since November truck rentals have come off by as much as 13-13.5% with the supplies of several commodities also falling, IFTRT, which tracks truck rentals across the country, noted. Moreover, a higher turnaround time for trucks is adding to logistics costs.
Indeed, the dull sales of new trucks reflect the weak demand; after growing at a brisk pace in the first half of 2018-19, volumes in the M&HCV segment of commercial vehicles were flat in January on the back of an 11% year-on-year dip in November and a 21% year-on-year dip in December.
The tipper segment was relatively unaffected on the back of road construction, affordable housing, irrigation projects and government spending on infrastructure projects.
Revankar explained that the sale of second-hand trucks was reasonably good with fleet operators using their vehicles to carry bigger loads.
Factory output grew at just 2.4% y-o-y in December, 2018; in November it barely grew clocking a growth of just 0.5%, a 17-month low. The Indian economy grew at a slow 6.5% year-on –year in the three months to December, 2018 with manufacturing clocking an increase of just 6.7% y-o-y.
Rentals on the Delhi-Mumbai-Delhi trunk route as on March 1 were `87,500, down 3% compared with January. Similarly, for Delhi- Guwahati-Delhi, the rental was `1,40,200, down 3.5% over the previous month. SP Singh, senior fellow and coordinator, IFTRT, pointed out freight rates have fallen for the fourth month straight. Singh said dealers he had spoken with had indicated a weak demand for commercial vehicles. While the dull truck sales in some months can be attributed to a high base, sector experts point out weak demand for goods is slowing sales.