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Commercial vehicle makers in for bumper sale as government increases carrying capacity of trucks

The move, the first in over three decades, will likely to result in greater cost efficiencies for logistic companies as they would be able to ferry more goods per trip.

Sumant Banerji   New Delhi     Last Updated: July 18, 2018  | 21:13 IST
Commercial vehicle makers in for bumper sale as government increases carrying capacity of trucks

In a move that is expected to be beneficial to logistic companies around the country, the government has decided to increase the maximum load-carrying capacity of trucks by 20-25 per cent bringing it at par with international standards.

The move, the first in over three decades, is likely to result in greater cost efficiencies for logistic companies as they would be able to ferry more goods per trip. At the same time, experts believe it may not have any short or medium term impact on demand for heavy trucks in the country as it is applicable only for new vehicles manufactured after the statutory order has been passed.

While commercial vehicle manufacturers would now have to re-align their capacities to adapt to the new norms which will have some cost implications, a bigger increase in prices is expected from 2020 onwards when stricter BS-VI emission norms would be implemented across the country. This is expected to lead to freight and logistics companies advancing their purchasing decisions.

"Globally, higher axle loads are permitted which enables higher efficiencies in the goods transport industry. In India, historically, we had allowed lower axle loads as well as lower vehicle speeds due to the inability of our road and highway infrastructure to support such higher loads or speeds," said Abhay Firodia, president, Society of Indian Automobile Manufacturers. "With the modernization of India's roads and highways, it is natural for government to look at higher load carrying capacities in trucks. We have, in principle, supported an increase in axle loads up to the European levels."

"Transporters would want to avail benefit from the new norms by bringing forward their replacement demand. In the best years of CV sales, replacement demand has accounted for 60 per cent or more of total volumes," said Hetal Gandhi, director, Crisil Research. "It would also push people to take faster decision on expansion or fresh purchases. We thus believe that commercial vehicle volumes in the higher tonnage segment (MHCVs) could see a further upside than 7-9 per cent growth which was expected earlier. However, long term growth may subside given benefits from higher load capacity. The implementation of norms will also arrest the tonnage shift in the medium and heavy commercial vehicle (MHCV) segment to a certain extent that was based on vehicles economics."

There are, however, concerns as the dual regulation for loading for trucks that this decision introduces -- older limits for existing and new trucks -- is likely to create confusion and may lead to existing fleet get away with overloading their trucks.

"The existing vehicles on the road are not certified for safety with the higher axle loads. Hence, this provision should not allow the existing vehicles with higher loads or else it will tantamount to legalising the wrong practice of overloading of the vehicles," Firodia said. "Such overloaded vehicles may or may not be able to meet the mandatory braking & steering performance requirements leading to safety issues on the road."

"Further, higher loads on vehicles will also require upgraded tyres and new specifications of the axles for which the supply chain also needs to gear up. Finally, there is no date of implementation mentioned in the notification. As BS6 vehicles development is in full swing and many of the OEMs as well as the supply chain would need some time to upgrade product designs and certify these new vehicles, a clear date of implementation of 1st April 2020 aligning with introduction of BS6 vehicles would be more appropriate," he said.

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