- Truck rentals fall 8-11% in Apr-June’12 quarter: As against 30-35% rise in truck rentals during the last 10 quarters (October 2009-March 2012), first quarter (April –June 2012) of the current fiscal witnessed a drop in truck rentals by 8-11% on trunk routes with almost 10-15% lower cargo offering from the SME sector, which accounts for 70% of manufacturing activity, where production was lower due to massive 8-10 hour power shortage, 25-30% lower arrival of summer season vegetables and fruits in the APMCs and 3-5% drop in import-export cargo. These cumulative factors reduced the cargo flow to the truck freight market and resulted in almost a double-digit drop in truck rentals.
- Number of trips decline 10-15% during April–June quarter: In Q1FY13, the truck trips/turnaround has dropped 10-15% on trunk routes. Trucks remain idle at various centres due to 3-4 days waiting period for return freight. If the freight market does not improve in the next quarter, there is every possibility that repossession of delinquent trucks may enter an uncertain phase similar to 2008-09. The automobile dealers have escalated the discounts on truck sales which extends to Rs60,000 to Rs90,000 in case of two-axle trucks, while in case of multi-axle trucks and trailers, the discount is as high as Rs1.0-1.5 lakhs.
- Current ground level situation pointing towards stress in the system: The truckers are under deep stress due to lower availability of cargo across large number of industrial hubs and various APMCs, resulting in 10-15% drop in trips on the trunk routes during April-June 2012 quarter. Not only this, the truckers are picking up less number of new trucks despite heavy discounts from automobile dealers and subvention to financers to maintain competitive EMIs to attract truck fleet owners. We remain cautious on the CV sales in the near-to-medium term, given the current ground level situation.
- M&HCV goods segment de-grew by 17.9% during Apr-June quarter: M&HCV goods segment declined by 17.9% y-o-y, with multi-axle truck sales down by 27.5% and tractor trailer sales down by 22.4%, indicating the stress in the system. This development is directly attributed to 8-11% drop in truck freight rentals on trunk routes and indiscriminate fleet expansion of high tonnage multi-axle trucks during last quarter ending March 2012, which was more due to large scale preponement of truck chassis purchased to beat the much anticipated increase in excise duty, which in the Union Budget, was raised by 5% on truck chassis.
- LCV goods continues its growth trajectory @20.1% for April-June’12 period: Need for Hub-and-Spoke model and launch of new models has fuelled growth in the LCV goods segment which has grown at a brisk pace of 20.1% for April-June’12 period. Ashok Leyland’s LCV offering ‘Dost’ has received a good response, thereby, helping the company to gain market share of 7.1% in this competitive segment.
- CV goods growth slows to 3.8% y-o-y during Apr-June’12 period: The growth in industry truck sales (LCV & MHCV goods segment) slowed to only 3.8% y-o-y during Q1FY13 due to lower cargo availability and lower truck rentals. The 17.9% y-o-y decline in M&HCV goods segment was compensated by a 20.1% y-o-y growth in the LCV goods segment for Apr-June 12 quarter.
Click here to read the full report
Prabhudas Lilladher has a nationwide distribution network, consisting of branches, franchisees and associates, providing a comprehensive gamut of financial services in the Institutional and Retail domain. Their services includes Equity, derivatives; margin funding, mutual funds, PMS, IPOs and online trading.
For more information please write in to email@example.com
Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.
- Q3 Auto Sector Review: Top picks Bajaj Auto and Exide Industries
- Top 2 sector bets for Union Budget 2015: Housing Finance and Automobiles
- Union Budget Preview: Reforms expected; impact on Automobiles likely to be neutral
- Monthly Auto Update: Flat growth witnessed as Excise duty hike takes toll
- Auto Sales - Jan'15: Maruti & Honda Cars continue to outperform
Have a question?
Also On IndiaNotes.Com
- Eight personal finance tips if you just started earning
- Wallet stolen? Here's how you can get back on your feet
- Stock Recommendation: Accumulate D-Link with a target price of Rs195
- Cipla: Limited upside; Rating downgraded to neutral