Overdue replacement cycle to drive recovery in commercial vehicles: VECV
In the CV market, trucks are replaced by big fleet operators in five to six years
Overdue replacement cycle of commercial vehicles will drive recovery in the market, while demand for trucks is expected to start coming back from October-November onwards, according to a top official of VE Commercial Vehicles (VECV). Despite the challenging market situation currently, the company, a joint venture between the Volvo Group and Eicher Motors Ltd, expects that truck makers may find it difficult to supply when demand starts coming back, especially when large fleet operators opt for efficiency and productivity to drive down operating costs.
In the commercial vehicle (CV) market, trucks are replaced by big fleet operators in five to six years, but the CV market dropped by 40 per cent in 2019-20, and this year the first four months have been almost a wash out and the market has dropped by almost 85-90 per cent. The replacement cycle which normally should have gone through last year has not happened. Similarly, this year the replacement has not yet happened.
Two years ago, the government increased axle loads following which customers started loading their trucks with revised loads, even though those trucks were not designed to carry those extra loads. Therefore if one drives for the best productivity, it means one will have to go in for replacement of the old trucks where one was carrying the extra loads with trucks which are not designed to carry those loads.
The normal replacement cycle has not gone through and secondly, replacements have to happen because of the axle load norms. So there will be huge replacement demand which will get generated due to past pent up, axle load related and current replacement (requirements).
Truck demand usually starts getting better with the start of the festive season from October-November onwards.