Key highlights:

  • GST seems to have had a positive impact on new truck demand
  • Travel time which has reduced by about 20-25% post GST
  • Average daily distance traveled has jumped from 225 km per day to 300-325 km per day

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

The concern of the impact on the medium and heavy commercial vehicle (MHCV) segment due to the goods and service tax (GST) seems to have been averted. In fact, GST seems to have had a positive impact on new truck demand and has positively impacted replacement demand, according to automobile analysts Chirag Shah and Karthik Subramaniam in an Edelweiss Securities report.

GST has pushed new truck demand due to efficiency gains in the travel time which has reduced by about 20-25% post GST. The Ministry of Road Transport and Highways recently stated that the average travel time has reduced by about 20-25% in the GST era as the time taken by trucks in the border check post between State borders has been eliminated.

As a result, the average daily distance traveled has jumped from 225 km per day to 300-325 km per day. The more distances covered by these truck fleets means more business for the companies, leading to them expanding their fleet to cater to higher demand.

Post-GST, travel time of trucks has reduced by a fifth: Govt

  • MHCV revival in demand to be delayed as govt leaves out truck transporters out of GST registration
  • Freight rates up on fresh cargo movements, trucks position