Daimler India Commercial Vehicles (DICV), the maker of Bharat Benz trucks and buses, has entered the used-truck market. The company has also started a vehicle-exchange programme.
Satyakam Arya, managing director and CEO, DICV, said: “Fleet owners have affordability issues, given the slowdown, and they are looking for reliable and quality-assured used vehicles rather than a new truck. The introduction of BS-VI norms has pushed costs higher.”
How does the market work?
The market works in two ways: selling an old truck and exchanging an old truck for a new one.
In the first instance, a Bharat Benz truck owner can take his old truck to any DICV outlet, where the company will refurbish the vehicle, provide warranty, certify it and offer funding support to the buyer. The company will also transfer the residual warranty of the vehicle to the new buyer.
The exchange programme will function very much like a car exchange programme - evaluation of condition of the truck, price offer to the buyer, and finally the sale. The sale amount will be adjusted with the price of the new DICV vehicle.
Only trucks in the Medium and Heavy Commercial Vehicles (M&HCV) segment and Bharat Benz brands will be accepted by the company initially.
Used-truck market in India
Like the used-car segment, this is a highly unorganised market, though as per estimates, for every new truck, three old ones are sold.
With around 100,000 trucks and 3,000 buses on Indian roads, DICV is trying to create a new stream of business and strengthen its brand image in the market, heavily dominated by Tata Motors, Mahindra & Mahindra and Ashok Leyland.
DICV, which has products in the M&HCV segment, designed and developed in-house by the company, will restrict the used-vehicle business to the truck segment.
In FY20, the M&HCV truck segment clocked sales of 184,648 units, a fall of 47 percent, compared to FY19, as per data shared by the Society of Indian Automobile Manufacturers.
Chennai plant production
Arya said that DICV will very likely start its second shift in production from its Chennai plant next week. The company has seen green shoots in the construction, mining and infrastructure segments.
In 2019, DICV saw its wholesale volumes plummet 36 percent to 14,474 units, compared to 2018. Retail sales dipped by 29 percent to 15,196 units during the same period.
Its market share in the over 9-tonne category slipped 5.8 percent to 14,474 units in 2019 from 22,532 units in 2018. The company says it is its worst market share in five years.
In May, the company signed an MoU with Tamil Nadu to invest an additional Rs 2,277 crore for expanding production capacity in Chennai and for developing new vehicles.
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