Banks and other lenders are sitting on a huge inventory of over 35,000 repossessed (loan defaulting) trucks/trailers, even as medium and heavy truck sales crashed 25.6% in 2012-13, according to a report by independent agency Indian Foundation of Transport Research and Training (IFTRT).
Multi-axle trucks and tractor trailers led the sales crash with a 32.5% drop reflecting the poor cargo offerings from manufacturing sector, infrastructure sector and import-export trade.
Quarter on Quarter drop is tabulated below:-
“The economic scenario across sectors remained gloomy as cargo dispatches displayed negative trends and fleet utilisation dropped by 20-25% on the trunk routes leading to truckers shying away from expanding their truck fleet. New entrants kept away from truck purchases despite heavy discounts and soft auto loan schemes at the end of the fiscal. Bankers /NBFCs are facing multiplied delinquencies across the country for non-payment of EMIs and large number of fleet owners have been surrendering their loaned trucks to the financiers,” the report said.
During the fiscal ended March, truck sales were down by 89,505 units, with 2,60,144 units sold in FY13 against 3,49,649 units sold during the corresponding period last year. It added that the resale market of old trucks witnessed a drop of 25-30% in market price leading to truckers holding on their truck fleet as most of the trucks by end of fourth year of new purchase happened to be encumbrance free.
This move has helped the fleet operators to bear with the adverse impact of negative economic trend and drop in truck rentals by 7-8% during the fiscal ending March 31, 2013. On the outlook for the current fiscal (FY14), IFTRT said that truck sales and particularly heavy multi-axle category, is not expected to see any major change till the first half because manufacturing sector and export trade does not show any major positive indications of improvement in a big way.
A revival in medium and heavy truck sales seems unlikely in the near future. Data on the Index of Industrial Production released on Friday show the manufacturing sector (which has a weight-age of 75 per cent in the index) grew a mere one per cent in the April-February period, against 3.7 per cent in the year-ago period. Mining output contracted 2.5 per cent during the same period.