Volvo Eicher sees no rush among transporters to buy BS-IV trucks

There is defence mechanism that has set in as the BSIV stock has to be zero by 31 March. Business runs on optimism. Everyone very cautious as of now- Vinod Aggarwal
Volvo Eicher Commercial Vehicle (VECV) hasn’t seen any rush among transporters to buy BS-IV trucks even though prices will go up by 8 to 15 per cent from April 1, once BS-VI takes effect, said company Managing Director (MD) and Chief Executive Officer (CEO) Vinod Aggarwal. 

According to Aggarwal, the coronavirus outbreak has disrupted supplies from China. 

The impact could have been worse if the demand was high because VECV and others would be struggling to meet timely deliveries. “All of us had expected pre-buying but there is none,” he said. He added that the last two months sales (for the industry) have been low and the fall in February has been steeper than the year-to-date (YTD) drop. Trucks above 16 tonnes have seen a fall of 60 per cent in sales, he added. 

Had it been normal months like the previous years, the industry would have benefitted from the advancement of purchase ahead of the changeover in emission norms, he said. The slow sales have cushioned impact of the disruption in supplies from China, said Aggarwal.

Manufacturers are exploring alternatives to fulfil their supply chain demands but it would take a substantial amount of time to reach stable production levels. This is because these components would need regulatory testing, said Rajan Wadhera, president, Society of Indian Automobile Manufacturers (SIAM) in a statement on Wednesday. 

Automakers in India import about 10 per cent of their raw materials from China. “The disruption in availability of these parts is likely to critically hamper production across all segments,” he said.

Truck sales in the country have been falling since June 2019. In the first 10 months of the fiscal year, it has skidded 42 per cent over the same period a year ago, according to Siam. 

Aggarwal attributed the poor offtake of models with older emission technology to three key stakeholders – manufacturers, dealers and transporters – being conservative in their approach. This is due to the same cutoff date for both sales and registration of vehicles.

In an interview last month, Girish Wagh, president – commercial vehicles business unit – at Tata Motors, too, had conceded that pre-buying has been quite muted with only large and medium fleet operators buying BS-IV vehicles ahead of the new norms.

While dealers and manufacturers are wary of being saddled with excess inventory, financiers are not willing to offer credit unless they are confident that the model will be registered before the deadline. 

“There is defence mechanism that has set in as the BS-IV stock has to be zero by March 31,” said Aggarwal. “Business runs on optimism. Everyone is very cautious as of now,” he added.

The Pithampur-based company rolled out its entire range of BS-VI trucks and buses last week. 

It also launched a vehicle up-time centre. With the help of electronic control units (ECUs) installed in the trucks, the centre will enable the company to fix the BS-VI models on a real-time basis in the event of a breakdown, said Aggarwal. 

“In the second phase, we will also offer predictive maintenance of the vehicles. This is in line with the overall modernisation programme,” said Aggarwal.

Given the sharp contraction in M&HCV (truck) volumes during YTD FY20 and inventory correction being undertaken by the manufacturers, volumes are estimated to contract 16-18 per cent for the full year, ICRA had said in a report in January.

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