Chennai: Used truck prices have seen a sharp uptick year-on-year with light commercial vehicles seeing high double digit growth. According to the latest Shriram Mobility Bulletin, vehicles in the 1.5 to 2 tonne segment saw a 38% jump in prices in the used vehicle market. The 2 to 3.5 tonne segment was up 22% and the 3.5 to 7.5 tonne segment was up 21% (see table).
The only other segment to clock higher price hikes was the 31 to 36 tonne category but, said truck marketers, this is more a skew given how few of the higher GVW (gross vehicle weight) trucks get repossessed.
Ashutosh Pandey, CEO, Mahindra First Choice Wheels, “In the last one year in the smaller tonnage segment, the unorganised fleet used for inter and intra city logistics has been moving increasingly from new trucks to used. This is happening because of price increases and some stress in the logistics market since the freight rate increases have not been as consistent of late as in the past. So smaller unorganised fleet operators have to rely on cost reduction and used trucks are 40% cheaper than new.”
According to used truck marketers, the trend towards used trucks has been visible for nearly two years now. “Over the past two years, prices for all types of used commercial vehicles, whether BS IV or BS VI, have increased 25-30%,” said a Shriram Finance spokesman. “The subdued sales during 2019-22 have resulted in a shortage of supply in the used truck market.”
With new vehicle prices still on the rise, the used truck market is experiencing significant traction and prices for used vehicles are expected to remain strong. The current batch of new trucks (comprising one or two year old vehicles) will be available after a few years in the pre-owned segment. “This could potentially drive sustained growth in the used vehicle segment,” he added.
Typically the southern markets do not prefer used trucks as the logistics segment is more organized there. “East and north see higher usage of used trucks though in the north organized logistics players outsource to unorganised players,” said Pandey. As for the higher tonnage vehicles, most of these are sold individually and very few come into the repossessed pool so the average pricing is distorted, he added.
Typically the truck industry takes several small price hikes through the year partly to work in any changes in raw material cost and partly to offset discounts. Said SIAM (Society of Indian Automobile Manufacturers) president and MD & CEO of Volvo Eicher Commercial Vehicles Vinod Aggarwal, “Overall the truck market has been flat but the first quarter was impacted by the general elections. There are different sets of customers for used and new.” Normally, he added, a 4-5% price increase per year is normal in the truck industry. “With discounts having gone up significantly since last year, the gap between the MRP and the transaction price has gone up and we are trying to reduce that,” he added.
