Trends That Changed the Indian Trucking Industry in 2016

The official clock marking the end of year 2016 has officially begun. This year, like the previous one, was witness to multiple trends leaving deep impacts in the truck industry in India. While some of these worked in favour of the industry, others simply spelt tough times. There were also quite a few happenings, which bagged both good and bad reactions from the different bodies of the trucking world. All in all, the year was full of interesting trends, events, laws and legislations taking place in the vertical of Indian trucking industry.

We present to you, a first of its kind article to be published online in India, signifying the trends that changed, and are still changing the ways transport sector works in the country. The trends have been shortlisted on basis of the past effects these have had, present impacts they are leaving and future changes these might make towards the trucking community of India. All the trends we have selected have the potential of changing the course of truckers, fleet owners, drivers, CV makers as well as independent body makers doing business here in India. Have a look.

Demonetization effect

Economic experts have reacted both in favour and against the move aimed towards fighting black money in the country. But the move has certainly affected the trucking industry in India. Commercial vehicle sales had just started to pick up after a tight sales crunch before October 2016, and then came the demonetization move. The worst part about demonetizing INR 1000 and 500 currency notes was the fact that the Indian government gave nobody time to prepare whatsoever. The move has already affected truck sales and transport industry in the country, and it is estimated that truck sales will remain stagnant for few more months, two at the least.

Do note that BS-IV and mandatory AC norms kick in from April 1, 2017. It simply means truck models complying with these will get costlier and people looking to buy trucks before April 1, 2017, in order to save money are left with no cash in hand for making down payments. Truck sales will sky rocket as soon as cash becomes available in the country, possibly after January 2017. Fasten your seat belts as the last quarter of this financial year might witness new truck buying records being made in India.

Disappointing Sales in Q2

The year has really been tough on the CV makers in India. CV sales, when compared with numbers from the last couple of years have only saddened the transport market. Experts had anticipated truck sales to pick pace after a promising Q1 but lack of clarity over implementation of GST bill mummed all the sales forecasts. Fleet owners, transporters and individual truck owners were looking forward towards the uncertain restructuring of warehouses, and anticipated discount schemes, which might have accompanied the GST bill implementation.

Heavy rainfall resulting in less transportation demands can also be blamed for the poor show. It was really shocking to see CV sales tumble after a cemented start in Q1. The slump that started in Q2 ended with the festive season of Diwali, but then came demonetization.

Mandatory AC Regulation

This news probably has had the best effect on truck drivers in the country. The Government of India amended the Motor Vehicles Act, 1988 and made it compulsory for truck makers to sell trucks pre-fitted with air-conditioning, on or after April 1, 2017. Several experts argued over the move as air-conditioning might hamper the mileage resulting in increased freight rates, but truck drivers all over the country had got a reason to rejoice.

It will be interesting to see how CV manufacturers take care of BS-IV and mandatory AC norms at the same time, especially with just four months in hand before these kick in. The amendment will further make more truckers buy new trucks as early as possible, resulting in increased sales, in the last quarter of this fiscal year.

Surge in Freight Rates

The prices of commodities we consume, and clothes we wear depend a lot on the freight rates these get transported at. Freight rates can easily be explained as the price charged by transporters to move one or more commodities from one place to another. The end of Q1 became host to a sudden surge in freight rates. The incline was so drastic, it even made prices of commodities soaring high. A shortage of trucks, fluctuations in diesel prices and increased number of truck sales in Q1 are seen as the factors responsible behind the dramatic increase in prices.

It is a good to know information for everyone that diesel prices are directly proportional to inflation in the country. Next time you are wandering about reasons responsible for inflation, don't forget to check diesel prices as well.

Conclusion

All the developments are leading to an interesting final phase of the H2 for the current financial year. While January may just not be that good for the transport industry in the country, the rest of the period before April 1, 2017, will definitely make the CV manufacturers in the country happy.