The recent Supreme Court verdict banning commercial vehicles over 15 years old from plying in Delhi is expected to prove an unexpected bonanza for commercial vehicle manufacturers reeling under prolonged recession.
The two commercial vehicle majors, Telco and Ashok Leyland, who between them share the heavy commercial vehicle pie, have announced losses in the first quarter this year.
"The Supreme Court decision could well provide a much needed respite for the commercial vehicles sector,'' auto analysts felt. This has been a long-standing demand for all truck companies. "We cannot allow people to continuously recondition vehicles and keep running them, India is the only country where decades-old cars are still run,'' the sources added.
The judgment is expected to provide a benchmark and other states are expected to follow suit. "If the other states do not follow the Delhi example, the purpose of the verdict could, however, be defeated, as it is easy to gets the vehicles re-registered elsewhere,'' the sources said.
"The decision is expected to create a lot of replacement demand, resulting in a sales upswing for three-wheelers," sources close to Bajaj Auto said. "The overall impact of the decision is positive, it has been a long-standing demand of truck manufacturers,'' auto analysts commented.
"We will, however, have to wait and see as to what the implications are, because the Association of Indian Automobile Manufacturers' (AIAM) has pointed out that while vehicles above 15 years should not be used in metros, the age limit for semi-urban areas should be more, while the limit for rural areas should be even higher. Hence if the Supreme Court verdict is a precursor to the implementation to the AIAM recommendations, then no new demand will actually be created as vehicles above the age of 15 will then be sold to the semi- urban market, and subsequently to the rural market,'' an executive with an auto major said. Of a population of 3,38,50,000 vehicles nationwide in 1995-96, Delhi has the highest automobile population with the total registered vehicles being 2,66,0605. Bangalore follows Delhi with 7,97,612 registered vehicles. Chennai with 7,67,540 registered vehicles came third followed by Mumbai with 6,67,383 registered vehicles.
