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Truck fleet utilisation begins to recover

Published On Sep 07, 2020By Trucksdekho Editorial Team

After plunging to as low as 15-20%, truck fleet utilisation has climbed to 30-35% in July and August after lifting of the lockdown. The economy is opened further, and demand for freight is likely to improve over the next few months; this is visible in truck rentals' improvement on key routes. Also, OEMs' August sales indicate a strong recovery in month-on-month numbers.  

The government's decision to impose a total lockdown to contain the virus's spread in the month of April and May has hit the transport sector badly. After the initial few weeks of the ban on trucks and cargo movement, the government allowed trucks for essential goods carriers, this was further eased in the following months. This took a huge toll on the overall sector and the truck fleet-utilisation across the country dropped to historically low levels. 

The Indian Foundation of Transport Research and Training (IFRT), which tracks the monthly truck rental trends in India, reported monthly truck rental for July and August 2020. Post the COVID-19 unlocking, and the fleet utilisation was at 15-20% in June after lifting of partial lockdown, which has now climbed to 30-35% in July and August as the economy started to get back to normalcy. 

According to IFTRT, even before the COVID-19 situation emerged, the economy was already under strain, and the fleet utilisation of M& HCVs at that time was around 65% on medium and trunk routes. The steep hike of Rs.11 per liter of diesel during June - July 2020 and firming of tyre prices due to restriction on tyre imports from 12 June 2020 and some improvement in industrial activity and peaking of the arrival of fruits and vegetables, the truck rentals at June end went up by 15%-20% on the back of low fleet utilisation due to driver shortage. 

In July 2020 and August 2020, insistent rains had a direct adverse impact on the arrival of fruits and vegetables into APMCs by 30%-35%; despite marginal improvement in industrial activity due to extensive lifting of lockdown. However, this wasn't enough to compensate freight's poor availability to the truck operators on medium and long trunk routes. As a result, the truck rentals had dropped by 10%-15% during the last 45 days, particularly during August.

The moratorium on repayment of EMIs for the last five months ending 31 August 2020 has helped the truck owner tie over the liquidity issues and help with comfortable working capital requirements between April - August 2020. The industry is waiting for the final decision on extending the moratorium period and waiver of interest on EMIs.

It is unclear through the impact of the upcoming festival season, which is generally positive for auto sales. Yet, given the economy is still gathering steam, the overall demand for freight is likely to remain subdued. 

August Sales Recovers

Truck makers have reported a significant recovery in monthly sales in August. As the manufacturing plants started operating at normal capacities and retail touch-points now opened, truck sales across the country took-off post lockdown. The industry is looking past the COVID-19 with some positive customer sentiments emerging and anticipating festival and pent-up demand. While the M&HCV segment awaits some boost to the economy, the last-mile delivery segments, both the mini-trucks and pickups, saw an uptick in demand in August. 

Market leader Tata Motors reported a total sale of 16,837 units in August, the SCVs and pickup segment made a strong comeback with total sales of 11,370 units in the month. The M&HCV and ILCV sold 2,746 and 2001 units, respectively. 

Mahindra and Mahindra sold 15,299 commercial vehicles. The 3.5T segment consisting of pickup and mini-trucks has topped the sale with 15,097 units. Demand for Bolero Pikup remains strong as last-mile transport continues to remain buoyant in urban and rural areas. 

Ashok Leyland recorded 5,824 units of sale in the month, and this includes 2222 of M&HCVs and 3602 units of LCVs. The VE Commercial Vehicle August sale touched 2,190 units in the domestic markets. 

While the monthly sale is considerably low against the same period last year, yet there has been substantial increased month-on-month, indicateing that customers are returning to dealerships for purchases of new trucks. The easing of restriction, marginal recovery in the economy, and pent-up demands are likely to accelerate the sales over the next few months before returning to pre-covid levels. 

 

Also Read: Tata Motors introduces a future-ready commercial vehicle range

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