Uttar Pradesh Drives MHCVs Sales Up North

Pickup in road projects, overloading curbs and replacement demand push sales of MHCVs.

The demand for medium and heavy commercial vehicles (MHCVs) has traditionally been driven by industrial hubs such as Maharashtra, Tamil Nadu and Gujarat.

However, Uttar Pradesh is not only fast catching up but also emerging as a major driver for MHCV demand, helped by higher road construction, stricter rules against overloading and the replacement of vehicles.

The country’s largest state by population reported the highest growth in MHCV sales of 43.8% in the first nine months of FY18, according to Society of Indian Automobile Manufacturers data.

This was also four times the national average growth of 10.7% for the segment. Uttar Pradesh recorded 54% and 88% growth in MHCVs in the second and third quarter of FY18, respectively.

That helped make it the second-largest heavy truck market after Maharashtra, overtaking Tamil Nadu and Gujarat. SIAM is yet to publish data for the year to March.

Tata Motors and Ashok Leyland accounted for 62.1% and 21.5% market share in the MHCV segment in Uttar Pradesh at the end of December 2017, according to SIAM

Demand for tippers used in transporting blue metal or grit and sand increased significantly, reflecting higher activity in the road sector, said Anuj Kathuria, president, global trucks, Ashok Leyland. “The demand for completely built tippers supplied by OEMs (original equipment makers) like Ashok Leyland rose phenomenally since users did not have time to wait for third-party suppliers which often take more than a month to deliver,” he said.

Girish Wagh, head of commercial vehicles at Tata Motors, said roads, real estate and stricter weight control were boosting business. “Pickup in execution of road projects and affordable housing and clampdown on overloading have resulted in MHCV growth.”

He also said that fleet operators were increasingly opting for trucks of higher tonnage due to better cost economics. Trucks with five axles, which have a capacity of more than 25 tonnes, are gaining since their cost per tonne is cheaper by 15-22% than three-axle vehicles.

According to Wagh, five-axle trucks now account for 60% of the heavy truck volume compared with 10% two years ago. The demand for large trucks in UP has increased to 2,800-3,000 units a month from 700-800 units a few months ago.

SP Singh, a senior fellow and coordinator at the Indian Foundation of Transport Research and Training, said that pent-up demand, attractive financing options and higher demand for trucks used in road construction are boosting truck demand in UP. Some finance companies don’t require any down payments on loans.

“There are nearly 30 major road projects under execution to improve connectivity in eastern UP,” said Vijay Kumar Singh, engineer-in-chief at the Uttar Pradesh Public Works Department. “The majority of projects are in Lucknow, Varanasi and Gorakhpur.”

The demand for medium and heavy commercial vehicles (MHCVs) has traditionally been driven by industrial hubs such as Maharashtra, Tamil Nadu and Gujarat.

The major roads currently under construction or being widened are on routes such as Delhi-Meerut, Aligarh-Kanpur, Lucknow-Varanasi, Allahabad-Mirzapur and Varanasi-Gorakhpur. Between FY16 and FY18, the total length of national highways in Uttar Pradesh increased to 9,016 km from 8,483 km, according to the Ministry of Road Transport and Highways.

In the Uttar Pradesh state budget for FY19, the government allocated 650 crore and 550 crore for preliminary work on Bundelkhand Expressway and the Gorakhpur Link Expressway, respectively. It has also allocated 1,000 crore for the Purvanchal Expressway, and 500 crore for further work on the Agra-Lucknow Expressway. The Uttar Pradesh government has proposed to spend 26% of the total capital expenditure of 76,300 crore on various road projects.

source: https://goo.gl/HznDw5