Financial Daily from THE HINDU group of publications
Monday, Jul 22, 2002
Industry & Economy - HCV/LCV/Tractors
CV makers confident of market recovery
A Volvo FH 12 truck... New data reveals that the CV market may witness a turnaround.
MANUFACTURERS and dealers of commercial vehicles (CVs) are cautiously optimist about the probable turnaround of the market, particularly in the remaining months of the fiscal, even as they witness signs of recovery.
As per the latest figures released by the Society of Indian Automobile Manufacturers (SIAM), the sales of CVs have recorded a 53 per cent jump to nearly 13,000 vehicles in May. "These figures are encouraging and we are expecting moderate to robust growth in the sales of multi-axle vehicles in the coming months," said one senior executive of Tata Engineering.
So far, multi-axle trucks have been in demand in the Northern and Western regions, particularly in Rajasthan, Maharashtra and Gujarat, where an increasing number of fleet operators are replacing their traditional nine-tonne single-axle vehicles with higher capacity multi-axle ones.
According to one estimate, nearly 50 per cent of the heavy commercial vehicles (HCVs) registered in Rajasthan particularly those engaged in marble transportation are heavy-duty multi-axle trucks. But such fleet consolidations are yet to begin on a large scale in a state like West Bengal where factory dispatches are abysmally low and truck owners and fleet operators largely depend on wholesale traders for cargo.
The reason why growing number of truckers are opting for multi-axle vehicles is simple: They would like to cut down on the operating cost per vehicle substantially. The study suggests that the cost per kilometre for every tonne of freight carried by the Railways is Rs 1.32 and for a single-axle truck it is Rs 1.75. But in the case of the multi-axle truck the cost per kilometre per tonne has worked out to Rs 1.40.
This favourable cost per kilometre per tonne ratio helps the multi-axle fleet owners quote competitive freight rates vis-à-vis the Railways while still having their profit margins intact.
Another major advantage of the multi-axle vehicle is its high average payload and equal load distribution. A 16-tonne double-axle truck has a payload almost double that of a nine-tonne single-axle truck and that too without any further increase in the overhead cost. This increase in load carrying capacity outweighs the advantages that a single-axle truck possesses. An ordinary (single-axle) truck costs Rs 6.5 lakh, while a double-axle truck costs Rs 9 lakh and a triple-axle truck carries a Rs 12-14 lakh price tag.
True, in terms of mileage, a single-axle truck is better placed 3-3.5 km per litre compared to 2-2.5 km in a triple-axle truck. But then the load-carrying capacity of a triple-axle truck is nearly three-and-a-half times a single-axle truck. Thus, the cost per tonne carried falls due to this higher capacity advantage of multi-axle multi-vehicles.
Prior to the entry of Swedish auto giant Volvo, Ashok Leyland and Tata Engineering were the only two manufacturers of multi-axle vehicles in India. So far, Volvo has launched its products at the higher end of the multi-axle tipper segment.
In the double-axle truck segment, Telco's LPT 2515 TC range of vehicles is pitted against Ashok Leyland's Taurus 2516, Tusker Gold and Tusker Super. Almost all these models have Power Steering, 120-160 hp turbo-charged engines and Gross Vehicle Weight (GVW) of 25 tonnes.
To boost the sale of multi-axle vehicles, SIAM has asked the Government to scrap all CVs that are more than 15 years old. But such a move would put small fleet owners in difficulty as they normally borrow from private financiers at interest rates as high as 16-20 per cent.
The Task Force on Infrastructure in its draft discussion paper on `Integrated Transport Policy' has suggested that the Government go in for differential taxation to encourage the use of multi-axle vehicles. But little has been done on this to date.
(The author is a Kolkata-based freelance writer.)
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