Falling Truck Rentals May Affect Commercial Vehicle Sales

Truck rentals have fallen for the second consecutive month by 1 to 1.5 percent and commercial vehicle sales are getting affected severely. The major reasons can be attributed to a drop in movement of consumer goods and the ongoing monsoon season.

According to the Indian Foundation of Transport Research and Training report, cargo arrivals that include FMCG such as fruits, vegetables and pulses have dropped by 35 percent in July. Monsoon is another reason which has contributed in halting the wheels throughout the country and heavy rains have made the conditions worse for truck movement. The overall sales in first quarter of FY 2016-17, however, grew on year-on-year basis.

The commercial vehicle segment is expected to face more difficulties despite good prediction. For instance, infrastructure and construction industry has gone down and replacement demand has been witnessing a decline. Companies like Ashok Leyland have already suffered decline of sales in July month by five percent. The sales aren’t expected to increase in August too, as rains due to heavy monsoons will continue throughout the country.

Another report by Citi Research has suggested subdued economic recovery for the second quarter of FY17 as the speed of activity indicators has slowed down during the first quarter of FY17. This slowness is also mirrored by the low sales numbers in Q1 of FY17 as compared to the last quarter of FY16, however, the year-ago sales have been surpassed.