In the interaction with Business Line , T.T. Srinivasaraghavan also discussed the outlook for the commercial vehicle industry and emerging trends in the sector.

Despite all the measures to boost the economy, why is there not much improvement in commercial vehicle (CV) sales? How is the sector poised?

The problem with the industry is that we tend to go overboard both ways. When the outlook is positive we think it can only improve further. When it is sober, we paint a gloom and doom scenario. But if you take out the extremes, I don’t think we are doing too badly. Yes, one issue with the industry is over-capacity. Over-capacity came into this industry 10 years ago and hasn’t gone away. Year after year, the tonnage of vehicles sold has been increasing. If you look at the profile of CVs on the road today, it has changed dramatically.

Earlier, a majority of MHCVs (medium and heavy CVs) were 16-tonners. Today, 16-tonners are used mainly for tippers and buses. Instead the market has shifted to 25-tonners and is going towards 31-tonners and 49-tonners.

When there is that kind of tonnage increase, to be also looking at unit growth of 30 per cent is not realistic. If you go back to the haulage segment, clearly there is only so much room for growth. If you look at the long-term secular growth in developed economies, where road networks are massive, you will find none of them has grown 30 per cent year on year.

So the market is maturing more and more — one, tonnage has gone up ; two, technology has improved dramatically ; three, road conditions have improved, as a result of which replacement cycles are now longer. Affordability is also now a factor, given that a multi-axle truck on the road could mean an investment of Rs 25 lakh. If you put all of these things together, to me there is no surprise at all that the CV industry is where it is.

The shortage of drivers is also a constraint, right?

Yes, we even have customers telling us that they may not expand the fleet because they are facing a challenge in finding drivers. In every sector, the social part is as important as the economics part.

First, if you are a truck driver, the (social) image is not good. Hazards on the job are high. Driving for the IT and BPO industries offers drivers an alternative. They have air-conditioned buses, limited working hours and good support infrastructure for drivers, like waiting rooms, and so on.

Again, these days, I believe drivers are even saying they will not drive trucks that are more than six years old. Five years ago, I would not have seen these as future problems. One could have foreseen fuel-efficient technology for trucks as a challenge but not this. Yes, the improvement in highways has made a huge difference in terms of driver fatigue and stress reduction. But there is still a long way to go.

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