Automobiles: Truck rentals continue to decline
- Truck rentals fall 8-11% in Apr-June’12 quarter: As against 30-35% rise in truck rentals during the last 10 quarters (October 2009-March 2012), first quarter (April –June 2012) of the current fiscal witnessed a drop in truck rentals by 8-11% on trunk routes with almost 10-15% lower cargo offering from the SME sector, which accounts for 70% of manufacturing activity, where production was lower due to massive 8-10 hour power shortage, 25-30% lower arrival of summer season vegetables and fruits in the APMCs and 3-5% drop in import-export cargo. These cumulative factors reduced the cargo flow to the truck freight market and resulted in almost a double-digit drop in truck rentals.
- Number of trips decline 10-15% during April–June quarter: In Q1FY13, the truck trips/turnaround has dropped 10-15% on trunk routes. Trucks remain idle at various centres due to 3-4 days waiting period for return freight. If the freight market does not improve in the next quarter, there is every possibility that repossession of delinquent trucks may enter an uncertain phase similar to 2008-09. The automobile dealers have escalated the discounts on truck sales which extends to Rs60,000 to Rs90,000 in case of two-axle trucks, while in case of multi-axle trucks and trailers, the discount is as high as Rs1.0-1.5 lakhs.
- Current ground level situation pointing towards stress in the system: The truckers are under deep stress due to lower availability of cargo across large number of industrial hubs and various APMCs, resulting in 10-15% drop in trips on the trunk routes during April-June 2012 quarter. Not only this, the truckers are picking up less number of new trucks despite heavy discounts from automobile dealers and subvention to financers to maintain competitive EMIs to attract truck fleet owners. We remain cautious on the CV sales in the near-to-medium term, given the current ground level situation.
- M&HCV goods segment de-grew by 17.9% during Apr-June quarter: M&HCV goods segment declined by 17.9% y-o-y, with multi-axle truck sales down by 27.5% and tractor trailer sales down by 22.4%, indicating the stress in the system. This development is directly attributed to 8-11% drop in truck freight rentals on trunk routes and indiscriminate fleet expansion of high tonnage multi-axle trucks during last quarter ending March 2012, which was more due to large scale preponement of truck chassis purchased to beat the much anticipated increase in excise duty, which in the Union Budget, was raised by 5% on truck chassis.
- LCV goods continues its growth trajectory @20.1% for April-June’12 period: Need for Hub-and-Spoke model and launch of new models has fuelled growth in the LCV goods segment which has grown at a brisk pace of 20.1% for April-June’12 period. Ashok Leyland’s LCV offering ‘Dost’ has received a good response, thereby, helping the company to gain market share of 7.1% in this competitive segment.
- CV goods growth slows to 3.8% y-o-y during Apr-June’12 period: The growth in industry truck sales (LCV & MHCV goods segment) slowed to only 3.8% y-o-y during Q1FY13 due to lower cargo availability and lower truck rentals. The 17.9% y-o-y decline in M&HCV goods segment was compensated by a 20.1% y-o-y growth in the LCV goods segment for Apr-June 12 quarter.
Click here to read the full report
- Automobiles: CV channel checks - No improvement in sight
- Automobile April 2013: Sluggish sale
- Automobiles: Demand weakens further in Q4FY13
- Automobile: PAT likely to remain under pressure
- Automobile: Domestic two-wheeler de-grows by 4.4% for the quarter
- Macroeconomic indicators & Stock markets
- Midcap/Smallcap Indices - Time to catch up and stop under performing?
- MF Scheme Analysis: Franklin India Bluechip Fund (G)
- Note on RBI's Monetary Policy Announcement for 2013-14
- South Indian Bank Q3FY13: Results in line with expectations, retain accumulate More
Also On Valuenotes.Com
Invest early in your career
Know your PAN card better
BHEL Q4FY13: Reported PAT ahead of provisional numbers
Dish TV Q4FY13: Performance below expectation, well placed to capitalize on digitization
Dow Theory: A tool for technical analysts
Equity markets witnessed a choppy session of trade