Truckers to hike rates by 10-15%

Truck companies are planning to increase freight rates by 10-15 per cent to offset the rising cost of buying commercial vehicles due to hardening interest rates.

The truckers are angry that while the government has reduced prices of diesel ""which accounts for 60 per cent of their operating cost""to check inflation, the interest rate hikes have increased the cost of owning a truck by 40 per cent.

On a loan amount of Rs 8 lakh, the buyers now have to shell out Rs one lakh per annum extra as compared with over a few months ago. The prevailing interest rate is 15-15.5 per cent from 10-11 per cent some months ago. Over 98 per cent commercial vehicles are financed.

Gurinder Pal Singh, president, All India Motor Transport Congress, an apex body of transporters said, "The inretest rate rise of 4 per cent in the past nine months has increased the cost of owning a truck by over 40 per cent. We will be increasing the freight rates by 10-15 per cent."

The introduction of 0.5 per cent processing fee on all finance deals has also hit the transporters.

Aware of the clear signs of a slowdown in sales of commercial vehicles, the compnies are tying up with banks to work out inovative finance schemes. For example, banks, manufacturers and dealers are absorbing a hit of Rs 30,000 to Rs 60,000 per vehicle.

Aseem Dhru, executive vice-president & head, business banking & commercial transportation, HDFC Bank said, "The schemes are being worked out to minimise the impact of the interest rates on sales. Special packages are being worked out. The manufacturers are under pressure as they have added a lot of capacity."

Eicher Motors has also asked banks to work out new schemes to reduce the impact of the rising interest rates. "We are talking with key financers to work out innovate packages with lower interest rates to minimise the impact on our customers," said Humsa Dhir, head, corporate communication, Eicher Motors.

Tata Motors and Ashok Leyland said that they had a variety of marketing schemes for easy financing.

SP Singh of Indian Foundation of Transport Research and Marketing said, "The sales are steady but the general growth rate has slowed down. Companies have started offering subvention to banks to offer lower rates (of interest) so that the sales are not affected."

The traditionally strong heavy commercial vehicles segment registered a 7 per cent growth with sales of 28,812 units in March 2007, against 26,991 units for the corresponding period last year.

It was the light commercial vehicle segment vehicles segment which grew at 40 per cent at 13,502 units in March 2007 against 9703 units in the same period last year. The commercial vehicles segment grew at 13 per cent in March this year.