Dumping repossessed trucks, poor demand take toll on new fleet

Chennai: As the truck market continues to bleed due to poor demand, dumping of repossessed trucks in the market is dampening the demand for new trucks and pushing down resale value of pre used ones. According to transporters and truck marketers, these repossessed vehicles have been flooding the market pushing down pre-BS6 buying by fleet owners.
“Defaults are rising and NPAs are also on the rise in the industry.Truck discounts are very high right now — often as high as Rs 10 lakh on a Rs 29 lakh vehicle — and the countrywide floods meant trucks were not plying so business was poor. Also April-September auto slowdown means low movement of vehicles so truck owners were not making enough money to service loans. Infrastructure projects are also stuck so truckers are not getting paid. All of this has led to rise in number of repossessed vehicles,” said Ashok Khanna, group head-vehicle loans, HDFC Bank.
The NPA of most truck financiers are on the rise with some hitting 3%. “They are not able to dispose their repossessed stock at good prices thus making huge losses in the process,” a truck marketer said. “Of late the CV industry is seeing a rise in the discounts on new trucks which erodes resale value of a truck even before it leaves the showroom. Some of the large transporters are unable to meet their EMI commitments due to the low volume of business for almost 6 months as fleets have been underutilized. In addition, delayed payments with 3-5 months timeline for payback from cargo providers have put fleet owners under huge working capital pressure,” said Rajaram Krishnamurthy, VP-domestic sales, product management & network, Daimler India Commercial Vehicles. The good news though is some segments of the industry are seeing an uptick. “Our portfolio has actually shown an improvement in the last 15 days. There was a problem of full load in September-October due to the rain. As a result industrial, mining and infrastructure activity got postponed but now mining has started and infra tenders are coming so we have seen a n increase rise in credit demand in December,” said Umesh Revankar, MD & CEO, Shriram Transport Finance. The problem, he added, was that “corporates are delaying payments but my customers don’t depend on that segment”.