Shares of commercial vehicle makers, led by Ashok Leyland, today slumped up to 14 per cent after the government brought in new axle norms for load carrying capacity which experts said could hurt demand.
The scrip of Ashok Leyland tanked 13.93 per cent to end at Rs 110.60 on BSE.
Shares of Escorts fell by 3.50 per cent to close at Rs 861.75, Tata Motors dropped 2.19 per cent to Rs 251.95 and Mahindra & Mahindra lost 2.05 per cent to Rs 902.25.
The load carrying capacities of heavy vehicles, including trucks, have been increased by 20-25 per cent at par with global standards, Road Transport Minister Nitin Gadkari said yesterday.
"We believe the street is overly concerned about the new load-per-axle norms. Demand in the near term is thus likely to be subdued due to confusion around the applicability and implementation of norms," Edelweiss Research said in a report.
Rating agency ICRA's Vice President & Sector Head (Corporate Ratings) Shamsher Dewan had said the decision to "increase truck axle load by 20-25 per cent would be marginally negative for CV demand in volume terms as overloading has been a common phenomenon in India."
The government has made changes to regulations governing "axle loads". Prior to this, the changes were last notified in 1983.
After 35 years, the government has decided to increase the axle loads after taking into consideration the qualitative and quantitative changes in National Highways as well as reforms in heavy automobiles.
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