Axle norms: CV-makers fear price rise, demand drop in the short term

Even as the commercial vehicle (CV) industry awaits more clarity and details on the new axle norms announced by the Government, it fears that the move could lead to a 2-3 per cent increase in prices and have a short-term impact on sales.

While the new norms will benefit the logistics sector, CV manufacturers and industry representatives feel that the government could have taken into consideration the views of key stakeholders. Original Equipment Manufacturers (OEMs), already struggling to adapt to BS-VI emission norms, will definitely need a lead time to deliver vehicles under the new weight norms.

The uncertainty over the applicability of the notification (prospective or retrospective) may lead to postponement in purchase of new trucks by a month or two.

GVW norms

The new axle norm legalises overloading which is anyway rampant in intra-State freight movement. The gross vehicles weight (GVW) of two-axle trucks has been increased to 18 tonnes from the existing 16.2 tonnes. Likewise, the GVW for a three-axle truck has been increased to 28.5 tonne from 25 tonne.

In the tractor segment, a three-axle vehicles will have GVW of 29.5 tonne against 26.4 tonne earlier. The new rated loads are higher than the levels permitted in other developed nations.

“Only one notification has come and there are no details. So if I look at applicability, it looks like it is going to be applicable only prospectively. If you analyse the overload trend in the industry, the norms will impact only 40-45 per cent of the total industry,” according to top official of a leading commercial vehicle manufacturer.

“The norms will not be applicable to ICVs (intermediate commercial vehicles) as most of them carry goods which they can’t over-load. These include refrigerators, washing machines or pet bottles. In the volume-based transportation segment such as tankers and car carriers, there are norms (over-dimensional cargo) and the government can’t go beyond those norms,” he said.

Industry readiness

“For the revised axle norms, tyre and steering specifications have to be changed. There will be some changes in chassis too. Approvals and certifications from authorities like ARAI would be required before launching such vehicles. So, the government’s planning in the interim period is not clear,” he said.

After clarity on the regulation, OEMs will require two weeks for design modificationsand 3-4 weeks for approval of the new truck.

Country’s top truck-maker Tata Motors said it was studying the notification for engineering and certification implications.

According to a spokesperson of Daimler India Commercial Vehicles.“The detailed impact of the new regulation may depend on the availability of sufficient capacities for testing and especially homologation across States.

Based on the experience of the BS-IV transition, this could be an opportunity to re-think the present system of multiple State Transport Authority approvals and introducing one pan-Indian homologation process ,”

Ashim Sharma, Partner & Group Head, Business Performance Improvement Consulting of Nomura, said that OEMs may have to upgrade vehicles to avoid breakdown.

“So the axle, tyres, brakes, chassis may need engineering modifications. The costs may go up which will be passed on, resulting in higher CV prices, however, the total cost of ownership may decrease as the cost per tonne km will go down for vehicles capable of carrying higher loads,” he said.

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