Increase in truck axle load to impact CV sales

The road transport ministry’s notification on Monday to increase truck axle load by 10-25 per cent across various categories will impact overall commercial vehicle segment in India -- the world’s fourth biggest automobile market.

While the government move would lead to substantial gains for the medium and heavy commercial vehicle (M&HCV) segment in the short term, it is likely the light commercial vehicle (LCV) segment, or more specifically the small CV sub-segment, will be impacted adversely by a demand shift to heavier machinery.

The move would impact market leaders Tata Motors, Ashok Leyland, that command almost 70 per cent of the market in the country, and Mahindra and Mahindra, among others.

Auto experts said the government is likely to increase the gross vehicle weight (GVW) from 16.2 to 19 tonnes for a two-axle truck, from 25 to 28.5 tonnes for a three-axle trucks, from 37 to 43.5 tonne for a five-axle truck, and from 44 to 49 tonnes for a tractor trailer with five-axles. They said this increase would bring India’s permissible truck axle load limits to levels prevalent in developed nations.

“The proposal to increase truck axle load by 10-25 per cent would be marginally negative for CV demand in volume terms as overloading has been a common phenomenon in India,” Shamsher Dewan, vice president & sector head, Corporate Ratings at Icra told Financial Chronicle. In addition, select transport segments operate on volumetric basis like consumer durable, car carriers etc which would not be impacted by increase axle load as their load carrying capability is constrained by loading deck.

“The proposal will be positive for transport community as it will reduce compliance burden at check post and bring down transport cost per tone,” Dewan pointed out.

Raghunandhan NL, senior research analyst at Emkay Global Financial Services said the higher axle load would lead to an increase in system capacity and lower demand for new trucks. “Capacity would increase for large fleet operators on long-haul routes (carrying general cargo/bulk commodities) and there can be a marginally positive impact on short-term volume, due to pick-up in replacement demand,” he said.