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Green shoots appear in heavy truck segment; mining, road construction activity fuel demand

Trucks used for segments such as e-commerce, petroleum and lubricants industry, agricultural and dairy produce are seeing an uptick

June 30, 2020 / 10:15 AM IST
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In what could be the initial signs of green shoots in the economy, demand for medium and heavy trucks are showing an uptick, after a prolong slowdown.

Tata MotorsAshok Leyland and VE Commercial Vehicles, which control 95 percent of the medium and heavy commercial vehicle (goods) sales in India, said that demand for trucks used for mining, road construction and other activities has gathered pace.

While Tata Motors hinted at an uptrend in demand in an analyst call during the middle of this month itself, Ashok Leyland and VE Commercial Vehicles confirmed the trend to Moneycontrol last week.

Tata Motors is India’s biggest truck and bus manufacturer, and Ashok Leyland the country’s second-largest MHCV producer.

While there has been an uptick in demand for two-wheelers as well, a rise in demand for medium and heavy commercial vehicles (MHCV) used for bulk movement of materials always spells good news for a country at it is seen as a barometer of economic activity.

Girish Wagh, President, Commercial Vehicles Business Unit, Tata Motors said: “We see a few segments which are coming up. The first one is, for example, tippers from medium and heavy commercial vehicles. We also see good demand coming in for e-commerce for petroleum oil and lubricant segments, and also for segments like transportation of agricultural and dairy produce.”

According to Vipin Sondhi, MD and CEO, Ashok Leyland, “the trajectory of tippers and infrastructure has started to move. There is investment coming back. Therefore, tippers are already showing an interesting possibility.”

“I think by the next quarter (September 2020), we will start seeing some movement. Certainly by the third quarter (December 2020), there will be much more movement. And I think every quarter is going to be better than the other,” said Sondhi.

Ashok Leyland launched the next- generation truck platform AVTR in the beginning of June. This highly flexible platform is targeted at the MHCV segment, starting from the 18.5-tonnne to the 55.5- tonne segment.

VE Commercial Vehicles, the joint venture between Eicher Motors and Volvo, has won some new contracts in the coal mining space and this has directly resulted in heavy truck demand generation.

Vinod Aggarwal, Managing Director and CEO, VE Commercial Vehicles, said: “We have seen positive traction in the infrastructure space, lots of contracts are getting awarded and new tenders are opening in the coal mining sector. There are lots of activity in e-commerce space and LPG cylinder movement areas. Industries that are linked to the rural areas are showing pickup because harvesting has been good. Tipper demand is growing because of lots of activity in the construction space.”

Since the easing of the national lockdown, the pace of construction of national highways, expressways and metros have picked up again.

After the awarding of contracts for the Delhi-Mumbai Expressway, firms have already started construction activity. There are similar updates about the Mumbai-Nagpur Samriddhi Expressway and the four-laning of the Mumbai-Goa National Highway.

The switchover to Bharat Stage VI (BS-VI) emission norms, which pushed prices by 15-20 percent higher, preceded by the change in axle load norms that allowed truckers to carry extra load than usual were the main reasons behind the muted MHCV sales in FY20.

As per data shared by the Society of Indian Automobile Manufacturers (SIAM), the MHCV (goods) segment recorded a fall of 47 percent to 184,549 units during FY20 from 351,128 in FY19.

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Swaraj Baggonkar
Swaraj Baggonkar
first published: Jun 30, 2020 10:15 am