Truck Rentals Drop 5-7% in May on Key Routes as Supply Exceeds Demand

Truck rentals fell 5-7% during the second half of May 2025 on medium and long-haul trunk routes across India, according to the Indian Foundation of Transport Research and Training (IFTRT). The decline follows a period of strong performance in March and April when rates had increased.

The rental drop stems from an oversupply of long-haul heavy-duty trucks and reduced demand from e-commerce companies for intermediate covered body goods carriers. Additionally, manufacturing dispatches from micro, small and medium enterprises (MSMEs) across industrial belts decreased by 10-12% during May.

Approximately 500,000 to 600,000 heavy trucks, particularly three-axle vehicles with 28-tonne capacity, returned to normal long-distance routes after completing wheat and pulse crop transportation between March 15 and May 15. This influx of available vehicles contributed to the rental depression.

The Northeast region experienced the most severe impact due to heavy rainfall disrupting transportation activities. However, compensatory freight from agricultural produce helped prevent steeper declines, with farm-to-market supply increasing 10-15% due to bumper summer crops of fruits and vegetables.

Despite international Brent crude prices trading at $63 per barrel, diesel, lubricant and tire prices have not decreased correspondingly. IFTRT attributed this to market concentration among oil marketing companies and tire manufacturers, preventing logistics costs from benefiting from lower crude prices.

Consumer durables sales remained weak this summer, contrary to earlier predictions of record heatwave driving demand. This resulted in unsold inventory with distributors in urban areas. Rural spending shifted toward house construction rather than manufactured goods, supported by higher crop yields and increased farmer incomes.

The commercial vehicle finance sector faces strain as large fleet operators struggle with loan repayments. Many operators had expanded fleets to claim depreciation benefits and 28% input tax credit under GST but now face utilization challenges due to fewer large transportation contracts. While defaults remain limited to one or two installments, lenders are becoming cautious about new exposure.

Truck sales showed poor to average performance across different regions during the latter half of May, according to dealer feedback. Expected pre-buying ahead of mandatory air-conditioned driver cabin requirements from June 8, which would increase prices by ₹35,000-50,000 per vehicle, did not materialize significantly.

The report noted uncertainty in the broader economic environment, with cautious consumer spending affecting inter-state and intra-state trade growth despite India's claimed domestic market focus and 6.5% GDP growth rate.