Logistics

Medium, heavy trucks to face the brunt of Covid in 2020

Murali Gopalan Mumbai | Updated on April 17, 2020 Published on April 17, 2020

India’s medium and heavy commercial vehicle (M&HCV) segment could be the biggest casualty of Covid-19, which has led to a complete paralysis of the economy.

Vehicles in this category typically carry loads ranging from 15 to over 50 tonnes. Used extensively in the infrastructure space across sectors like roads/highways/bridges, construction, mining etc, it is the M&HCV segment that is often touted as the best reference point for the health of an economy like India.

Facing headwinds

Clearly, things are quite dismal on that front right now, as Covid-19 has pretty much derailed all growth prospects across sectors for a good part of this year and even the next. The M&HCV space was, in any case, facing severe headwinds even before this crisis broke out and things will only get worse from now.

For one thing, a lion’s share of fleet operators will hardly be in any position to resume business once the lockdown is lifted, even in the most optimistic scenario, early next month. There is no telling if another extension will be implemented beyond May 3 since this will depend on the spread and severity of the pandemic.

Drivers of M&HCVs have borne the brunt of the lockdown from the time it began, in late-March. Trucks were stopped at all State borders and drivers were left in the lurch with no access to food, water and basic hygiene.

The loads they were carrying in their vehicles were left to rot since access was denied to their final destinations. Many of the drivers, who were hopelessly marooned in this situation, have now headed back to their villages, leaving their trucks behind.

“The big problem now lies in finding these drivers once the lockdown is lifted. Many of them will be in no mood to return to cities and risk their health,” said a top executive of a truck company.

User segments hit hard

Beyond this are the realities of a battered economy where all segments, right from farming to mining, will have taken a severe beating. “In this backdrop, where is the business for heavy trucks?” he wondered.

M&HCV sales had already fallen 30 per cent between calendar years 2018 and 2019 (from 3.5 lakh units to 2.4 lakh units) even while there was some degree of optimism that this calendar would be a lot better. Companies had worked round the clock to ready their new Bharat Stage VI-compliant trucks till Covid-19 struck and tore the economy apart.

Clearly, no fleet operator would be in any mood to buy these expensive BS-VI offerings. In the process, there will be rapid sale of relatively new BS-IV trucks (registered before March 31) whose owners will be more than willing to dispose of them, even if this means incurring huge losses in the process.

These are early days yet but truck makers will already be staring at the prospect of large, unused capacities across their plants. In a worst-case scenario, if sales fall below 1.5 lakh units in calendar 2020, it will mark a 60 per cent fall from 2018 levels. The results could be disastrous in terms of a large number of fleet owners shutting down operations since it would be practically impossible for them to sustain their businesses.

Finding labour

While drivers represent one part of the void in human capital, the other will arise from the thousands of migrants who have left big cities to the safety net of their towns and villages. They are part of the country’s unorganised sector which are employed on company shop floors among other vocations. Truck makers will be hard pressed to quickly find this category of workers who form a key part of their contract labour once operations resume post-Covid.

The silver lining is that the going may not be as bad for smaller load carriers which will be more gainfully employed for intracity movement. However, till their larger siblings come back into the mainstream, there is little hope for an economic revival happening soon. “It’s these large wheels of M&HCVs that move a country like India. Till they are back in motion, the going will be tough,” said a company official.

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Published on April 17, 2020
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