Surge in Truck Rentals and Used Vehicle Market Amid Festive Season in India

As the festive season approaches in India, truck rentals have seen a significant surge in August 2024, driven by heightened demand from both the festive preparations and post-election activities. The India-Bangladesh border region, in particular, has experienced a remarkable increase in fleet utilization, reflecting the resurgence of trade along this critical route. This rise in truck rentals is occurring simultaneously with a decline in motor car sales due to excessive rainfall in several states, while the used commercial vehicle (UCV) market is witnessing robust growth across all weight categories.

In August, truck rentals rose for the second consecutive month, propelled by the anticipation of the upcoming festive season and increased activities following the recent elections. Fleet utilization in the India-Bangladesh border area saw a notable increase, climbing from 40% to 60% as trade resumed. Key transportation routes also reported significant rental hikes, with the Kolkata-Guwahati-Kolkata corridor leading the way with a 3.0% increase. Other major routes like Delhi-Kolkata-Delhi and Delhi-Hyderabad-Delhi recorded rises of 2.7% and 2.3%, respectively. In the Srinagar region, preparations for the apple harvest and the pre-election environment drove freight rates up by nearly 10%, further highlighting the dynamic nature of the market.

The latest Shriram Mobility Bulletin provides insight into the factors driving this increase in truck rentals. YS Chakravarti, Managing Director and CEO of Shriram Finance Ltd. emphasized that businesses across India ramp up production and supply efforts in anticipation of the festive season, leading to a noticeable uptick in truck rentals. “The Srinagar area, in particular, is buzzing with activity due to the apple-picking season and election preparations, both contributing to soaring freight rates,” he stated. Additionally, the reopening of trade at the India-Bangladesh border has played a crucial role in enhancing fleet utilization in that region. However, Chakravarti also noted the logistical challenges of recent floods in Gujarat, raising questions about the recovery pace in Andhra Pradesh and Telangana.

In the automotive sector, the landscape tells a different story. Motor car sales declined 6% month-on-month, with 280,151 units sold in August 2024 compared to 297,623 in July. This decrease can be attributed to heavy rainfall that limited showroom visits in states such as Gujarat, Andhra Pradesh, and Tripura. However, some regions, including Goa, Kerala, and Haryana, bucked the trend, reporting growth in vehicle sales.

The two-wheeler segment also faced challenges, with an 8% month-on-month contraction in August 2024. Despite this downturn, year-on-year sales in this category rose by 6%, fueled by the festive season’s upcoming demand. In contrast, the used commercial vehicle market has exhibited healthy year-on-year growth across all weight categories. Prices for 31 to 36-ton 4-wheeler UCVs increased by up to 12%, while the 3.5 to 7.5-ton category saw an 11% price increase. However, electric two-wheelers and three-wheelers experienced declines of 26% and 3% year-on-year, respectively.

Fuel consumption trends present a mixed picture. Petrol consumption rose by 2% month-on-month, translating to an 8% increase compared to the same period last year. Conversely, diesel consumption fell by 10% month-on-month, totaling 6.48 million metric tons. Meanwhile, toll collections demonstrated slight month-on-month growth, with a 7% year-on-year increase in volume and an 8% rise in value.

In summary, the truck rental market in India is experiencing a vibrant phase, bolstered by the festive season and renewed trade activities, while the used commercial vehicle sector flourishes amidst the challenges faced by the passenger vehicle market. As the situation unfolds, all eyes will be on how these trends develop in the coming months.