Northern truck market revs up:

Good News for the shareholders of Sicagen India Ltd

Ranju Sarkar

Some signs of recovery, or green shoots, in medium and heavy commercial vehicle sales have emanated from the northern states.

The North is seeing some activity but it is still early days,’’ said Ashok Leyland Executive Director (marketing) Rajiv Saharia. The note of caution notwithstanding, North accounted for 37 per cent of the Chennai-based truck maker’s sale in April and May, up from 26 per cent in the two months of the previous year.

According to a Tata Motors executive, the North accounted for 41 per cent of the industry’s sales of medium and heavy commercial vehicles in April and May 2009, compared to 25 per cent in the same period in 2008. Analysts said the recovery in the North is led by the movement of cement and stone in Rajasthan.

Truck sales, a barometer of the country’s economic health, have languished in the last few months as industry has faced a slowdown and foreign trade has come down. Matters were made worse when financiers offloaded the trucks they had repossessed from defaulting owners. Rentals rose a little till May as trucks were commandeered to transport the wheat crop. After that, rentals have softened a bit.

To be sure, medium and heavy commercial vehicle sales have declined in the North too in the first two months of FY10 but the decline has been lesser than other regions. The North shrunk the least, 19 per cent, in April and May 2009, even as industry sales fell 50 per cent. The South has shrunk the most — 77 per cent —, said a Tata Motors spokesman in an emailed response to a questionnaire. The contraction in the West was in line with the South, though the estimate for the same was not available. These two markets have contracted more because of their dependence on manufacturing as well as foreign trade (a majority of the ports are located in the West and the South), said truck makers. The market in the East did not contract as the other markets.

Some dealers in the North admitted that sales have picked up. Harcharan Laiker, managing director of Roshan Motors, a Tata Motors’ dealer in Jaipur, said sales have been recovering since January, after falling 40-50 per cent between September and December 2008, and have improved 25-30 per cent since March.