Skyrocketing price of diesel and its cascading effect on oil, spares, tyres, and other consumables of the automobile sector has crippled the motor trade in Karur region. Even established fleet operators are opting to offload their vehicles. There are very few takers for these vehicles as the prices have plummeted.
While the economic downturn has hit the industrial output, the prolonged spell of drought that resulted in low farm output has robbed these fleet owners of their business. Steady rise in diesel price in the last 10 months has come as the proverbial last straw on the camel’s back.
“The Centre’s decision to allow oil marketing companies to increase the price of diesel by 50 paise every month has hit us hard more than anything else. Since September last, diesel price has been revised 12 times and it translates to an effective rise of Rs. 11 a litre during the period,” says Karur Lorry Owners Association president K. Raju. “We urge the Centre to review the policy and truckers want a relook into issues such as tyre rates, insurance costs, and toll,” he says. The latest decision to increase the diesel price by 62 paise must be withdrawn if the common man was to be spared of any general price rise, Mr. Raju says. Industry sources says around 30 per cent of the trucks have remained off the road for the past several months.
A major dealer of trucks in Tiruchi says it has been difficult to meet sales target during the whole of the last fiscal and his year. “In the heavy commercial category, we hardly sell 10 trucks a month now against 80 trucks a month two years ago. After the recent diesel price increase, we have seen five bookings cancelled. Even our head office has scaled down targets this year to pragmatic levels,” he says.
For leading vehicle financiers, discretion is the watchword in lending to even the established fleet operators. “In any case, there are hardly a few takers and we are now concentrating on due collections but we notice many truckers are willingly surrendering vehicles unable to pay the dues regularly. Prices of used vehicle have plunged to record low levels. A one-year-old truck that used to cost Rs. 25 lakh is now available for Rs. 13 lakh,” says regional head of a vehicle financing firm.
Enquiries with a couple of cement producers in Ariyalur district indicate that they have scaled down their delivery output by 75 per cent in some cases. Their transport executives say demand has been cut to 3,500 tonnes a day now from 16,500 tonnes a day just four months ago hitting the truck operators hard.
“While previously a truck could get a return load to south Indian destinations within a week of reaching northern locations, now they need to wait for more than 10 days for getting the return load and that too at a poor freight rate,” says a seasoned trucker R. Viswanathan (63) of Karur.
“I want to exit the motor trade despite my sentimental indulgence but am finding it difficult to find takers for my trucks,” Mr. Viswanathan says on the plight of the industry.