The used truck market is currently experiencing a remarkable surge in prices, according to the latest Shriram Mobility Bulletin. Notably, the prices of 1.5 to 2-tonne used commercial vehicles (UCVs) have soared by an impressive percentage year-on-year (YoY), while the 7.5 to 16-tonne category has seen a robust percentage increase. In contrast, the 16 to 19-tonne category has experienced a minor decline.
Industry leaders attribute this price surge to strong demand and supply dynamics. Shenu Agarwal, MD & CEO of Ashok Leyland, remarked, “We are seeing a definite surge in demand in used trucks and consequently we have seen an uptick in used truck prices as well.”
Additionally, there are exciting developments on the horizon that could further enhance the appeal of UCVs. The Ministry of Road Transport and Highways is reportedly crafting a new policy aimed at scrapping vehicles based on their pollution levels rather than their age. This initiative seeks to eliminate poorly maintained vehicles from the roads, potentially leading to a deadline for transactions. “If this decision comes through it could come with a cutoff deadline for transactions which explains the rush for UCVs right now,” said a top truck dealer.
Another factor contributing to the rising interest in UCVs is their growing role in last-mile delivery. Despite the shift towards electrification, used light commercial vehicles are proving to be more cost-effective options for businesses, particularly in smaller cities. Ashutosh Pandey, a used vehicle industry veteran and former CEO of Mahindra First Choice Wheels, explained, “Used light commercial vehicle prices have gone up due to an exponential increase in their usage for last mile delivery including in smaller cities. Despite electrification, these vehicles are now more cost efficient to buy. The increase in heavy truck prices could be due to supply-demand issues as prices of new trucks have gone up. Overall prices of new trucks are up 10%.”
The positive momentum in the commercial vehicle sector coincides with record fleet utilization levels, reaching an impressive 90% ahead of the festive season. YS Chakravarti, MD & CEO of Shriram Finance, stated, “Positive outlook ahead of the festive season is driving goods movement, with fleet utilization levels hitting 90%, the highest we’ve seen in recent times. However, truck owners caution that an increase in freight rates is imminent as tyre prices and toll charges have risen in the past few weeks.”
Adding to this optimistic sentiment, Mr. Prakash Hinduja, Chairman of the Hinduja Group, Europe, remarked, “The thriving used truck market showcases the resilience and adaptability of our sector, positioning it for continued growth and success in the coming months.”
As we look ahead, the used truck market's dynamism is a testament to the industry's potential, setting the stage for a prosperous future.
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