Truck Rental Rates Drop in November 2024

Key Highlights:

• Truck rentals declined in November 2024 due to weakened demand for transportation services.
• BS4 truck ban in NCR and reduced agricultural movement contributed to the decrease in fleet occupancy.
• Truck Rental rates on major routes decreased.
• Two-wheeler and agricultural tractor sales saw a 27% and 29% increase month-on-month in November.
• EV sales continued to decline, with EV car sales down by 38% and two-wheeler EV sales dropping by 19%.

In November 2024, truck rental prices declined across major routes after stabilizing in October. This decrease was due to a weaker demand for transportation services, which led to a drop in fleet occupancy levels to about 60%, compared to the previous month. 

Factors contributing to this downfall included weaker urban demand, the ban on BS4 trucks in the NCR region, election-related activities in Maharashtra, and a reduced movement of agricultural produce.

Impact of BS4 Ban in NCR Region

A significant number of trucks in operation are BS4 compliant, and with the entry ban on these vehicles in the NCR region, they now transport goods only to the NCR border. 

Goods are then transferred to smaller BS6 or CNG trucks for final delivery, resulting in increased logistics costs. Additionally, the slowdown in logistics activities due to polling in Maharashtra also reduced the demand for truck rentals.

Declining Rental Rates on Major Routes

Truck Rental prices for key routes such as Delhi-Chennai-Delhi and Delhi-Bengaluru-Delhi dropped by 1.4% and 1%, respectively, from October.

Y.S. Chakravarti, CEO of Shriram Finance Ltd., noted that the logistics sector slowed post-festive season, with private consumption growth dropping from 7.4% to 6%. Weaker urban consumption, high food inflation, and higher borrowing costs were all factors behind the decline.

Decline in Passenger and Commercial Vehicle Sales

Passenger vehicle sales, however, saw a sharp decline. Car sales dropped by 36% month-on-month, largely due to the end of festive schemes. Commercial vehicle sales also dipped, with bus sales down 32%.

Positive Growth in Two-Wheeler and Agricultural Sales

On a positive note, the two-wheeler segment saw a 27% increase in sales month-on-month in November, likely due to continued demand from the Deepavali festival. Sales of tractors increased by 29%, driven by favorable monsoon conditions and expectations of a good Rabi harvest.

Electric Vehicle Sales Continue to Struggle

Electric vehicle (EV) sales faced a significant downturn. EV car sales fell by 38%, and two-wheeler EV sales decreased by 19%. It remains uncertain whether upcoming EV model launches will boost sales in the near future.

Fuel Consumption and Toll Transactions

Fuel consumption saw a 7% increase in diesel usage in November, while petrol consumption rose by 0.3%. FASTag transactions, however, rose by 4%, indicating higher traffic volumes. Despite this, total toll collections decreased by 0.7%, possibly due to shorter trips or smaller vehicles, which incur lower toll charges.

Also Read: Shriram Mobility Bulletin: Surge in Used Commercial Vehicle Sales in June 2024

CMV360 Says

The drop in truck rental rates and the challenges faced by the electric vehicle market highlight the tough economic situation. While sectors like two-wheelers and agriculture are doing well, other areas are struggling due to lower demand and transportation issues. The BS4 truck ban and election activities have also added to these challenges.