17 Jul 2018

Reports of increasing load carrying capacity of trucks roils CV maker stocks

Ashok Leyland, Tata Motors, SML Isuzu stocks lose between 6-8% in intraday trade, M&M and Eicher lose between 0.5-1.5%

A news report by CNBC-TV18 saying that the Government was set to hike load carrying capacity of trucks and truck trailers sent shivers among commercial vehicle (CV) makers. Stocks of CV makers such as Ashok Leyland, Tata Motors and SML Isuzu lost between 6-8% in intraday trade. M&M and Eicher Motors too shed gains, though less than 2%. As per the news by CNBC-TV18, load carrying capacity of heavy trucks could be increased up to 25%. Accordingly, the following changes could happen with respect to load carrying capacity of heavy trucks:

of Axles
Gross vehicle
weight in Tonnes

Current Proposed
2 16.2 19.0 17%
3 25.0 28.5 14%
5 37.0 43.5 18%
5 (tractor
44.0 49.0 11%
Source: CNBC-TV18

The new rules pertaining to hike in load carrying capacity are expected to be notified on Tuesday (July 17, 2018). There was a similar news on June 8, 2018 regarding truck axle load hike, which mentioned different quantum of load hikes. Click here for the article. While the move will benefit logistic players, it is negative for CV makers since it could reduce demand for trucks, given that a single truck can carry more load. We feel that the blow could soften a bit if stricter implementation of overloading ban comes into force. Exact details regarding implementation of the load hike are awaited.