With half their fleet idle, transporters feel the pinch of auto slowdown

The auto industry slowdown over the last 10 months has hit the car carrier industry hard with almost half of the trucks standing idle. There is no sign of revival as of now, say the fleet owners. 

The Rs 4,000 crore car carrier industry has been hit badly by the auto sector slowdown.

"The slowdown is so severe, that almost half of the 15,000 trucks which carry cars across the country are standing idle now. Even others are waiting for several days or even weeks before getting loaded," said Vipul Nanda, president of Car Carriers Association, the apex body of car carrier transporters who ferry passenger cars from OEMs to dealers across the length and breadth of the country.

"The current situation is very alarming. Almost half of the vehicles are standing and there is no sign when the revival will take place," he added. Fleet owners are also worried about rising levels of debt. 

According to sources from the logistics sector, a commercial vehicle manufacturer near Chennai was earlier using around 200 trucks from third party transporters to transport various components between its suppliers and its manufacturing unit and is now using only 120-140 of these vehicles. Even the number of trips has come down from three per week to one per week now, said a driver.

Another driver, who hails from Jharkhand and currently drives a car carrier truck ferrying vehicles from some of the car manufacturers near Chennai, said that his truck has been standing idle for 20 days, as the fleet owner could not repair the vehicle.

Transporters are facing many challenges and are struggling to fulfill their financial commitments, or even repay petrol pumps for fuel, said another fleet owner. Even some of the large logistics companies are looking to sell their trucks to tide over the difficulties. 

The industry consists of three categories - the top segment of big corporate firms which are around 15-20 per cent of the total industry; the mid segment comprising those who manage 100-500 trucks fleet, which is around 50 per cent of the industry; and the small transporters who owns 50-70 trucks and contributes to around 30 per cent of the industry. The worst hit are the small transporters, as they dont have sufficient resources. They used to ply load for one company on one route and load other cargo on the return trip. As the slowdown extends beyond the auto sector, they are not able to make their trips viable. 

Many of the companies are looking to sell their trucks, but most of them are constrained by the terms of lending firms, and moreover, there are not many buyers out there in the market. Financing has also become tougher and while some of these financiers allowed restructuring of the loans earlier, with the slow down and lower viability, they are not ready to restructure the loans.

"The government's measures would take some time to show an impact. There is lot of confusion among automobile manufacturers and customers, including on the issue of switching to BS VI regime. The demand has to pick up and I think it would happen probably by next August or September, towards the next festival season," said Mukesh Haritash, joint managing director of Chetak Logstics and co-chairman for Logistics Committee of FICCI. His company, which has 2,500 trucks - 75 per cent of which cater to the automobile, construction and infrastructure industries - has nearly one-fourth of its fleet standing idle.

He said there is confusion among auto manufacturers as they are unsure of whether to produce BS VI or BS IV vehicles. While BS VI vehicles may be hard to sell owing to higher prices, BS IV vehicles may lead to inventory pile up, thus leading to heavy discounts.

The increasing fuel prices, shortage of drivers and an increase in toll prices are the other challenges that the car carrier industry is facing at present, says Nanda.

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