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Dec 03, 2012, 12.52 PM IST | Source: Moneycontrol.com

Auto- Truck rentals plunge 4-5% post Diwali: PLilladher

Prabhudas Lilladher has come out with its report on auto sector. According to the research firm truck rentals increased by 3-4% during pre-Diwali period and by post- Diwali it plunged 4-5%.

Prabhudas Lilladher has come out with its report on auto sector. According to the research firm truck rentals increased by 3-4% during pre-Diwali period and by post- Diwali it plunged 4-5%.

Within a week after Diwali, truck rentals on the trunk routes lost steam by registering a significant drop of 4-5% due to a slump in the cargo offerings from manufacturing sector, except cement, FMCG and steady arrival of fruits and vegetables into APMCs, as economy remains on a weak wicket. Despite record discounts and soft auto finance schemes, M&HCV goods segment declined by ~17.7% for April-Oct’12 period. Key findings of the IFTRT report are mentioned below:

Truck rentals increased by 3-4% during pre-Diwali period: October 2012 and mid-November 2012 (Pre-Diwali) has expectedly seen a buoyancy in truck rentals and increased fleet utilization by 10-15% due to peak festival season and consumer spending; 15-20% increased arrival of fresh fruit and vegetables in the APMCs and diversion of truck fleet to intra-state operations to meet the transport requirement of paddy procurement in the country.

Truck rentals plunge 4-5% in a week post-Diwali: However, the gains of October 2012 and pre-Diwali period in the current month have been negated away in the post-Diwali period within one week (14 - 20 November) as truck rentals have dropped in this period by 4-5% as consumer demand has slumped. At the same time, post Diwali the despatches of goods were lower by 10-15% in comparison to the October - November 2012. Now, the only support of cargo offerings is coming from fruit & vegetables, cement, FMCG, pharmaceutical items, while demand for the other manufacturing products across the spectrum, particularly SME units, is dwindling.

Recovery still not in sight: The truck business has been still lower by 10-12% over the same period last year and it would be too early and far-fetched to relate the present upswing to the larger economic recovery. Although, at the end of September 2012, the truckers were able to pass on the increased cost of diesel price hike of Rs5/litre by way of 5-6% jump in truck rentals in that month, there is strong possibility that if the situation does not improve by way of government actions to boost its expenditure and demand, the truck rentals may face a further slide in the coming weeks.

The gains of October 2012 and pre-Diwali period in the current month have been negated away within last one week (14 November - 20 November 2012) in the post- Diwali period as truck rentals have dropped in this period by 4-5% as consumer demand has slumped immediately. At the same time, the Diwali goods despatches were lower by 10-15% in comparison to October - November 2012.

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To read the full report click here

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