The Hindu Business Line : Truck sales dip 10% in Q1 despite discounts

New Delhi, July 7Despite huge discounts offered to mitigate the impact of high interest rates on truck sales, there has been a 10 per cent dip in sales during the first quarter of the fiscal 2007-08.

The decline is due to excess capacity that was created in the market due to “indiscriminate expansion” vis-À-vis lower cargo available for transportation, according to a research report.

Truck sales (5 to 49-tonne capacity) declined to 53,708 vehicles in the first quarter ended June 2007, compared with 59,956 units in the corresponding quarter last year.

This is in contrast to the anticipated growth of 15-20 per cent in the commercial vehicles segment, according to the latest report released by the Indian Foundation of Transport, Research and Training (IFTRT).

“With lower cargo availability and indiscriminate fleet expansion of multiple axle trucks, there has been a mismatch in loading capacity of trucks causing a decline in sales. Further, there has been a severe shortage of trained drivers on heavy trucks, that has constrained the capacity to expand the fleet,” it stated.

Cargo availability

The report states that cargo availability has been the single largest factor driving the sales of truck as against the general perception of interest rates.

It points out that in the last fiscal, sales of heavy trucks (25.2-tonne capacity) rose 65 per cent to 1.22 lakh units from 74,054 units in the fiscal before that, despite increasing interest rates during that period.

It also states that in the latest quarter, there has been a decline of 6-10 per cent on truck rentals on trunk routes due to slowdown in manufacturing of the automotive sector, small and medium enterprises, and sluggish cargo supply from poultry, livestock and agriculture.

However, the double-digit growth in the manufacturing sector, 18 per cent growth in export trade and 26 per cent growth in import cargo, has prevented truck rentals from a much steeper fall, it says.

Monsoon drive

While there has been a ten per cent dip in sales, IFTRT states that sales could go up after the monsoon when the manufacturing sector would pick up, resulting in utilisation of the current truck fleet, and on account of the festive season.

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