The ongoing Covid-19 pandemic in India continues to have an impact unimginable even a few month ago. It has led to organisaitons and individuals taking unprecedented measures to tackle and attempt to find a sure footing to survive and stay relevant. Now, in what may come as bad news for the government and the automotive industry, especially commercial vehicle manufacturers, the All India Transporters’ Welfare Association (AITWA), which is said to represent nearly 65 percent of the organised Indian road transport business, has asked its members to defer new truck purchases in FY2020-21.
A letter issued by AITWA to its members two days ago, assessed by Autocar Professional, says that the transport sector is going through financial turmoil due to the pandemic, and as a result it is constrained to “adopt measures to safeguard our businesses and trade in general.” Furthermore, since there is no stimulus package from the government of India to support the industry, “we need to be self-reliant as suggested by the Prime Minister.”
As the transport sector employs millions of people, with a huge number of individuals not being highly-educated, AITWA says their well-being is its responsibility and many of its members are doing whatever they can to provide support. AITWA estimates that there are over 9 million trucks (90 lakh) operating in India, with most of them not being used in the last two months due to various reasons, which has led to direct losses for them. As these trucks have paid or will pay road taxes, insurance, permit fees for the whole year despite having had fewer months to operate.
In what comes as a strong message to its members, AITWA has said, “We fear once some kind of normalcy prevails, the excess available capacity of vehicles will become too high due to demand contraction – fall in production, export and trade levels. Entry of new vehicles will mean more bloodbath. Thus, our advisory to members of the road transport sector is to consciously decide not to purchase any new trucks for at least full year of 2020-21. This will ensure that we help in utilising of trucks which are already on the roads, mostly owned by single truck owners.”
The apex transporter body believes that for the transport sector to survive, "the fresh supply of trucks needs to be stalled. “Unless we help ourselves, we can’t expect anyone to help us. Our mantra for self-reliance will be #NoTruckforMe.”
The AITWA statement continues that "we are sure that each one of us will agree to this and take necessary steps to ensure we do not get lured by deals from financial institutions or CV manufacturers as there is still a lot of uncertainty on the movement picking up too."
Over 40 lakh trucks may go out of business in the next 6 months
Speaking to Autocar Professional, Mahendra Arya, National President, All India Transporters’ Welfare Association, said that with the ongoing Covid-19 pandemic has caused major disruption to the already troubled transport industry. The trucking industry was already facing the challenge of excess capacity before the Covid-19 pandemic, and with over two months of lockdown and counting, many truckers have been left without any source of income.
In fact, according to Arya, of the 90 lakh trucks plying on the Indian roads, around 70 lakh are single truck owners, of which around 50-60 percent (35 lakh to 42 lakh) may go out of business. He says, “We have written many letters and have tried to approach the Central government for the issues the trucking industry is facing. The government’s stimulus package also finds no mention or has any benefit for our industry. With the excess capacity many truck owners will not be in a position to pay of EMI’s as a result, they will either be forced to sell their trucks or the banks and financial institutions will seize their vehicle.”
Responding to the operational challenges that AITWA members are facing Arya says, that the trucking industry was operating at around 25 percent driver strength, which has gone down to just 10-11 percent as many truck drivers have gone back to their villages. He says, that the transporters are working under tremendous pressure, and without any kind of insurance, safety kits, etc.
When asked about the impact of the much-awaited Vehicle Scrappage Policy, Arya says, “The Scrappage Policy will hardly have any impact on new truck sales for its members. Most of the long-distance trucks in operations are less than 15-years old, and very few of our members operate them otherwise. Even if there are some replacements, we are already facing excess capacity (less demand, more trucks).”
With the Covid-19 pandemic bringing about such a situation it is evident that the automotive and transportation industry is faced with an uphill task. Industry stakeholders now can only hope and look towards the government to find some policy or package to lend support to sail through tough times.
CV sales plunge 29 percent in FY2020
AITWA's note to its members will be difficult to digest for CV OEMs, who have experienced a very difficult FY2020. Overall sales decline in the segment was 28.75 percent in FY2020 and sales plummeted to 717,688 units (1,007,311 / -28.75%) in the fiscal.
M&HCVs with a negative 42.47 percent growth and sales of 224,806 units (390,732) were more severely hit than LCVs which fell 20.06 percent to 492,882 units (616,579), owing to the downfall of the real-estate sector as well as a complete stop on all infrastructural activities under the nation-wide lock-down.
Within M&HCVs, goods carriers recorded a substantial decline to sell only 184,549 units (351,128 / -47.44%), while LCVs saw goods and passenger carriers register double-digit de-growth of 20.71 percent 13.04 percent and sales touching 447,513 units (564,409) and 45,369 units (52,170), respectively.
Also read: Most truck drivers in India are sleep deprived, compromise road safety: SaveLife’s hard-hitting report