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Surge in Used Commercial Truck Prices in June 2024 Amidst Economic Strain: Shriram Mobility Bulletin

Mumbai, July 08, 2024 – The latest edition of the Shriram Mobility Bulletin, released today, highlights a turbulent month for the automobile and logistics sectors in India. The report underscores the multifaceted challenges impacting these industries, including a sweltering heatwave, delayed monsoons, impending elections, and soaring interest rates. These factors have collectively exerted stress on rural areas, subsequently affecting logistics operations across the country.

Decline in Passenger Vehicle Sales

Passenger vehicle sales have taken a significant hit, with a year-over-year (YoY) decline of 6.77% and a month-over-month (MoM) drop of 7.18%. The decrease in demand has led to an unprecedented accumulation of inventory at vehicle dealerships, now reaching between 62 to 67 days’ worth of stock. This overstock situation poses additional financial strain on dealers already grappling with the economic downturn.

Fuel consumption patterns have also shifted, with a 5% decrease in the use of petrol and diesel in June 2024 compared to the previous month. However, on a YoY basis, petrol consumption rose by 4%, while diesel consumption saw a modest increase of 1%. These figures suggest a complex interplay between reduced short-term demand and longer-term growth trends in fuel usage.

Truck Rental Rates and Used Commercial Vehicle Sales

The logistics sector has experienced mixed trends in truck rental rates. Specifically, rentals on the Mumbai-Kolkata-Mumbai route decreased by 2.6%, while the Kolkata-Guwahati-Kolkata route saw a rental rate increase of 4.1%. Despite these fluctuations, the market for used commercial vehicles has shown robust growth. Sales of 7.5 to 16-ton capacity trucks rose by 7% YoY, and those for 31 to 36-ton capacity vehicles surged by an impressive 43%.

Impact of the Houthi Attack and Container Demand

The lasting effects of the Houthi attack last November continue to disrupt major transshipment hubs, significantly increasing demand for containers. This ongoing situation has compounded logistical challenges, further straining the supply chain and contributing to the rising prices of used trucks.

FASTag Toll Collections and E-Way Bills

The bulletin also notes a positive trend in FASTag toll collections, with a 2% increase in volume and a 7% rise in value on a YoY basis. Additionally, the generation of e-way bills showed a MoM increase of 8% for intra-state and 5% for inter-state transactions for May 2024, indicating a gradual recovery in freight movement.

Optimism Amidst Adversity

YS Chakravarti, MD & CEO of Shriram Finance Ltd., expressed cautious optimism about the future. He stated, “With the new government in place and with monsoon rain expected to gain strength, businesses are hopeful that policy action from the government will help push economic activity into a higher orbit. The slowdown across sectors including road transport and vehicle sales appears temporary.”

Looking ahead, Shriram Finance Limited is optimistic that the ongoing Kharif season, which will culminate in the harvest by mid-August, will provide a much-needed boost to the sales of agricultural, trailer, and commercial tractors. The company anticipates that these developments will help stabilize the market and stimulate economic growth in the coming months.

As the country navigates through these challenging times, the data presented in the Shriram Mobility Bulletin offers a comprehensive overview of the current state of the automobile and logistics sectors, providing valuable insights for stakeholders across the industry.

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