The commercial vehicle sector in India is experiencing its worst ever recession with fears that stimulus by the banks may not be enough to turn the tide. Passenger car sales have also slowed, but the situation is nothing like as bad as in the truck and bus business.
The medium and heavy truck segment, which accounts for the bulk of the transport industry’s load capacity, shrank by 26% in 2012/13 and is expected to decrease by a further 29% in the current year. Demand is so sluggish that the industry will be more than happy if it sells 157 000 medium and heavy trucks in 2013/14 – in other words, about as many as it sold a decade ago and 47% below the peak of 299 334 units sold in 2011/12.
The current recession, which has been on going for the past 22 months, is biting deeper and lasting longer than previous downturns.
Despite huge discounts of between 25% and 45%, there was an estimated five months of stock at dealers and company stockyards at the end of December. Most units are being sold at 2010 prices and this is hurting cash flow.