Wednesday, May 16, 2012

Commercial Vehicles Finance - The Road Ahead

To keep up with the current market scenario, the finance companies are adopting many innovative approaches to optimize profit in the Commercial Vehicle Loans segment. Usage of cutting edge technology and streamlining of processes have helped them in operational cost savings. Also alternative sales and distribution arms like DST and DSA have given the benefit of larger distribution spread at a minimal cost. Faster response to clients' requirements, tailor made products to suit consumer needs have further helped in achieving the targets these companies have set.

Buoyancy in the infrastructure segment and positive trends in the industrial products are the critical factors triggering the growth in Commercial Vehicles segment. Also the measure taken by the government to up bring the agricultural sector will add to growth of Commercial Vehicles industry.

Despite having better rail and water ways India is still heavily dependant on surface mode for movement of goods. With various projects like NHRI, golden quadrangle, transporters will be blessed with better productivity.
The impetus on port activity too will positively impact this industry. Another critical factor will be the replacement demand forced by the implementation of stricter emission norms.

In the last 3-4 years we have witnessed application based assets getting introduced in the market and both domestic and international manufacturers showing higher amount of interest in offering sophisticated and technologically advanced products.

In spite of the current slow down due to various factors, Commercial Vehicles industry has witnessed growth in segments like Tippers, Buses, tractors trailer segments and sub 1 ton category of vehicles. With the implementation of emission norms in to A and B cities and metro cities forcing for stage IV norms the industry is going to witness a huge replacement demand.

We are yet to be blessed with better infrastructure within cities and between major cities and towns; this is again limiting introduction of higher capacity products and viability of existing operations. The transformations of one being looked at as a mere transporter to logistic solution provider has just begun in India where as many of the developed countries have achieved this long ago.

With all these developments taking place, the commercial vehicles financing companies are geared up for the unprecedented growth in the segment.

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