Tippers push fresh demand for MHCVs

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Updated: March 25, 2016 2:00:26 AM

In the last one year, medium and heavy commercial vehicle segment has managed to recover some lost volumes on the back of resumption of activity in the infrastructure and manufacturing space. Consequently, truck fleet owners were propelled to replace their old trucks by new ones.

In the last one year, medium and heavy commercial vehicle segment has managed to recover some lost volumes on the back of resumption of activity in the infrastructure and manufacturing space. Consequently, truck fleet owners were propelled to replace their old trucks by new ones.

However, with the resumption of mining activities, especially coal, in states like Jharkhand and Chhattisgarh, truck manufacturers are witnessing fresh demand for tippers which is helping the segment to sustain the current levels of growth. This is good news for manufacturers like Tata Motors and Ashok Leyland as the fortunes of the two companies are heavily linked to performance of the medium and heavy vehicle segment.

R Ramakrishnan, senior vice-president, commercial vehicles, said that demand was coming mainly from fleet replacement. Now the infrastructure led growth is beginning to happen and tippers are being bought for that purpose. Some activity in the mining sector has already begun especially in coal.

With resumption of coal mining tipper sales have started to see some upward movement and once iron ore mining starts tipper sales may further rise in the future.

“Till the middle of this fiscal year that segment was in the negative territory and in the second half of the year we have managed to see the double digit growth in this space compared to last year.

In the April-February period of the current fiscal, M&HCV volumes increased by 30.63% y-o-y to 2,65,236 units when compared to 2,03,039 units in the corresponding period.

Industry experts said that the much expected vehicle scrappage norms and restrictions on overloading vehicles will increase demand for new vehicles. Echoing the sentiment of the manufacturers, vehicle financing institutions are expecting healthy growth in this segment. Ramesh Sobti, managing director and chief executive of IndusInd Bank said that the demand has gone beyond the replacement stage because the freight rates remained very stable. So, if replacement demand had been met then freight rates should have fallen by now. “There are passengers, goods and then there are the loaders which go into the mining area. That demand used to be 100,000 vehicles. It now fell to 20,000 vehicles. Now, I think the mining part is opening up,” Sobti explained.

Freights rates have also managed to remain stable as the cargo from the manufacturing and infrastructure sector improved and is likely to increase in the coming days and months.

Freight rates in the Mumbai to Delhi route – busiest one – increased by 1.1% to R82,400 per round trip during the April to March of the current fiscal year.

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