21 November 2018

Industry Focus-Trucks And Tippers

Tipping up the ante!

 

Truck and bus sales in India rose at a brisk pace in the financial year that ended March 31, 2018 with most companies in the sector reporting record sales volumes. A pick-up in infrastructure projects, overload bans in some key states and easy financing fuelled the demand. The growing pace of the infra projects throughout the country have upped the ante for the trucks and tipper market in India. Rohan Ambike reports.

 

Powered by India’s trillion dollar focus on modernizing its infrastructure to global norms, the construction, mining and infrastructure sector are fueling demand for tipper trucks.

 

Overall the Indian CV market is projected to grow at a CAGR of 11 per cent until 2019, and 56 per cent of the market by value is accounted by Tippers in the mining segment. Most global OEMs are present in the Indian market and giving a tough fight to local brands who are entrenched players in the Indian market.

 

The demand of the tipper trucks is directly linked to the growth of the economy and particularly in sectors like roads and constructions, mining as well as infrastructure projects. Ranchers and farmers utilize tipper trucks to transport a lot of grain and grass between ranches or to advertise, influencing it for some agriculture operations. With a blast in the development area, the countries are seeing more tipper trucks bungling its streets.

 

Tipper truck, otherwise called dump/dumper truck, is a business truck utilized for the transportation of materials in mass. The materials, for instance, incorporate sand, rock, and pulverization waste from the construction industry, limestone and fuel ash materials from the concrete business; and refuse from strong waste administration.

 

New road projects in developing countries, high development rate of construction activities comprehensively, and reclamation of mining exercises in nations like India are driving the worldwide tipper trucks market.

 

The Indian government had announced road projects such as the Golden Quadrilateral and the Pradhan Mantri Grameen Sadak Yojana, In FY 2016-17, as of 25 January 2017, projects worth Rs 23,201 crore of the GOI allocations for FY 2016-17 (revised estimates/RE) had been approved by MORD.

 

As the construction industry improvement builds, it relatively prompts the interest in tipper trucks, as tipper trucks are primarily utilized for transportation in the development and mining areas.

 

 

Rental market

 

The rental equipment industry is capital intensified. Assets are required for obtaining and upkeep of hardware fleets, secure stores, deal with the fleets, and for working the business. Money inflows from business, time utilization and higher costs added to the development of this service market. In total global tipper truck market, on an average 65 per cent goes in the rental market and remaining into the retail sector.

 

In 2017, a cut in diesel prices during the month of April did little to deter rising truck rentals, which have been northbound over the past couple of months. Through April of 2017, they moved up by 2-2.5 per cent from the previous month. The movement of agricultural produce such as wheat rose by about 25-30 per cent in addition to fruits and vegetables, with improved output, according to a report by the Indian Foundation of Transport Research and Training for the previous year.

 

This year, the rental truck and tipper market has declined by nearly 10 per cent across India as stocks have piled up in the last few days in factories in the southern region. While the South is a major production centre, North is a major consumption market, according to industry experts. Wholesalers and traders have curtailed lifting of inventories due to GST migration fears. Apart from GST, the monsoon has also played a villains role. Due to the monsoon, vegetable and fruit supplies are expected to witness a routine drop. The trade and commerce reeling under GST shift will be concerned about managing their inventories to avoid any major loss due to stock transfer.

 

It is also said that the truck rentals may further weaken for a few days and it will have a direct impact on truck fleet induction and replacement for medium and heavy commercial vehicles. Heavy truck sales have been less than half in May in comparison to the same period last year with resistance to high priced BS-IV vehicles, existing over supply of National Permit truck fleet and fear of the unknown on the improved fleet utilisation post GST regime.

 

 

 

Trends shaping the Indian Market

 

Changes post GST

 

Most of the players across the construction and the equipment market have agreed to the fact that post initial hiccups, some of the progressive economic policies of the government such as GST have turned out well for the industry. Everyone has now accepted the changes and is doing business. Also, it is well known that the CV industry has come out of the aftermath of the disruptions created by demonetisation. Truck utilization is already on the rise, which has given an impetus to the demand for medium and heavy commercial vehicles. Electronic toll collection through the FASTag program has also enabled fleet operators to improve turnaround times. There is a huge growth in Tractors and multi axle segments, while tippers are catching up. The post GST era has brought the companies in this domain to rationalizing the locations. There is also a rise in the organised players, logistics companies as well as e-commerce companies that are foraying into offering logistics services to manufacturing companies for their inbound and outbound supply chain requirements.

 

 

Sustainable Transport & Electric Vehicles

 

Projects such as the Electric cars, EESL (Energy Efficiency Services Ltd) – an energy services company set up by the Government of India has already awarded contracts to leading car OEM’s for nearly 10,000 EV’s to replace ( over the next 3-4 years) the petrol and diesel cars used by government agencies. The Indian intra city bus market is already seeing action with over 10 City based transport undertakings and Smart Cities floating tenders to avail the subsidy given by the Central Government under The Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India Scheme). OEMs too are doing their bit in investing in technology and homologating electric buses. The country is at the cusp of a new revolution in transportation, and it is VECV’s endeavour to provide India with the best mobility solutions

 

 

Rise of Connected Commercial Vehicles

 

Changing times such as the possibility of having a faster communication network, simple interface, advanced telematics solutions, and growing infrastructure will drive the market for connected vehicles market. In the near future, Asian countries like India and China should be prominent automobile markets for connected vehicles. Connectivity will be a boon for commercial vehicles. The progressive segment of fleet operators as well as logistics companies are already keen in having telematics in their trucks and are clear that this will be the differentiator for them as they bid transportation contracts with their clients. The adoption of Telematics in the Passenger Bus segment is relatively slower. The lead of course has been taken by the Public bus transportation segment- particularly in the intra city bus services that make extensive use of ITES. The next segment that will be able to leverage the power of connected -ness is the school bus segment where all the key stakeholders like the parents, school and the fleet operator will be able to track their child/bus on a real-time basis.

 

 

Stricter Emission Norms

 

Today, India has turned to new technology and caused to pull out a massive change in the automotive segment where it has played catch up with the developed countries in the areas of safety features, technology and emission standards. Attention towards safety and environmental concerns, regulations and policies such as FAME scheme and switch to BS IV norms has enabled India as a hub for cleaner vehicles. Leapfrogging from BS IV to BS VI is indeed a bold and calculated move by the government which is committed to the Paris Climate accord on reducing greenhouse gas emissions starting 2020.

 

 

Growing sales in India

 

While the passenger vehicle market is headed for record numbers this fiscal year ending March 2018, it looks like the critical commercial vehicle (CV) sector – considered to be the barometer of the country’s economy – is also driving into good times. In the April-November 2017 period, the overall CV segment has recorded sales of 491,981 units, which marks 10.60 percent year-on-year growth (April-November 2016: 444,817). While the LCV sector is chugging along nicely with 308,679 units (+17.07 per cent ), the medium and heavy commercial vehicle (M&HCV) sector, with sales of 183,302 units (+1.19 per cent ) is back in the black.

 

 

 

OEM offerings

 

With the rise of players in the trucks and tipper segment, it has become difficult to keep a track of the player with an edge over the others. However, like last year, it has been clear that global brands have been having the bigger piece of cake and racing ahead of the competition. Prima facie driving in the tipper segment are eating into market share of entrenched Indian players. Following are the tipper offerings from major OEMs present in India.

 

 

Tata Motors

 

Tata Motors is the leader with maximum market share in India’s CV market. It has trucks across the spectrum including Construck, Prima, and Signa, platforms, all of which offer tipper variants in various capacities. The company is also a major player in emerging markets.

 

 

Ashok Leyland

 

Ashok Leyland ranks second in volume terms in India’s CV market. Headquartered in Chennai, India, the manufacturing footprint spreads across the globe with 8 plants; including one at Ras Al Khaimah (UAE). It has JVs with John Deere (USA) for construction equipment, Continental AG (Germany) for automotive infotronics and the Alteams Group for the manufacture of high-press die-casting extruded aluminum components for the automotive.

 

 

Eicher Trucks and Buses

 

Eicher Trucks and Buses has a lineage of three decades in India, and is clocking maximum year-on-year growth among all truckers in India. Its Eicher Pro series is committed to modernize Indian trucking with its “Go Pro” tagline. This Indian OEM is racing ahead of the competition in the fast lane.

 

 

Volvo Trucks

 

Volvo Trucks was the first global brand to drive into the Indian market with a JV with Eicher – Volvo Trucks India VE Commercial Vehicles Ltd. The company is now reaping rich dividends of being an early bird in the Indian market.

 

 

 

Going ahead

 

The Indian truck market is being driven primarily by a set of conventional players with home grown technologies which currently suit the market requirements. The global players, however, with their high performance, technologically superior and safer products have pushed the conventional players to upgrade their technologies. The global players, in recent years, have increased the local content of their products in order to become more price competitive and this has largely resulted in their success in the export arena to other developing parts around the globe. A Strategic Analysis of the Indian Truck Market endeavours to provide a succinct but comprehensive review of the market dynamics, trends and market size of the different truck industry segments throughout India. The report also forecasts a significant change in vehicle segmentation. It suggests there will be a substantial increase in volumes in the light commercial vehicle (LCV) segment and a proportionate percentage consolidation in M&HCV truck volumes, despite an element of overall growth in this segment too. This forecast is based on trends predominantly witnessed previously in other developing economies, as India moves to a hub and spoke distribution model and increased use of multi-modal transportation.

 

 

 

Conclusion

 

Ongoing activity at the tipper trucks manufacturers stable heralds good news for the industry with the increasing response to newer applications, characterising product modifications and refinement. However, inclusive demand for the equipments will have to be stimulated through creation of infrastructure jobs in large volumes apart from newer financial packages, so as to make the products affordable to own and operate.

 

 

FAST FACTS:

 

  • Overall the Indian CV market is projected to grow at a CAGR of 11 per cent until 2019.
  • Leapfrogging from BS IV to BS VI by the start of 2020.
  • OEMs too are doing their bit in investing in technology and homologating electric buses.
  • This year, the rental truck and tipper market has declined by nearly 10 per cent across India



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