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Recurring lockdowns continue to keep truck movement low, disrupt supply chain: Volvo Eicher

Recurring lockdowns continue to keep truck movement low, disrupt supply chain: Volvo Eicher

Recurring lockdowns continue to keep truck movement low, disrupt supply chain: Volvo Eicher
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By Alisha Sachdev  Jul 24, 2020 7:14:21 PM IST (Published)

Recurring lockdowns continuing into the month of July have kept business activity low, and are preventing the movement of trucks from picking up fully, the chief executive of commercial vehicle maker Volvo Eicher Commercial Vehicles (VECV) said.

Recurring lockdowns continuing into the month of July have kept business activity low, and are preventing the movement of trucks from picking up fully, the chief executive of commercial vehicle maker Volvo Eicher Commercial Vehicles (VECV) said.

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A large number of trucks are still standing idle as business activity fails to gather pace in the view of sporadic lockdowns, VECV MD and CEO Vinod Aggarwal told CNBC-TV18.
Aggarwal said that while demand for new commercial vehicles should improve month-on-month, the current year will remain a challenge for the industry.
"This year will be a difficult period for CV industry. There will be gradual MoM improvement from the festive period. The month of July will not be too good as the lockdown continues. Next month is going to be rainy season when trucks are not bought. So we are only expecting a revival from the festive season," he said.
In sum, "even if we are very optimistic, the year will be tough for CVs. We expect business activity in India will pick up from next year," he added.
However, Aggarwal said he was certain that there will be pent-up demand, which will come up when business activity picks up.
"Demand will come cumulatively in the future. We have to ensure we sustain ourselves during this difficult period," he said.
The extended lockdown in the wake of COVID-19, however, has disrupted supply chains more.  "It is the supply chain that has been more adversely impacted due to lockdowns in many states, truck operations have not been impacted much," the VECV chief said.
If the lockdown continues for a long time, it will affect production of trucks in factories, according to him.
"We are currently operating at low levels of production, which is why there has not been much impact from the supply side, but once activity is normal, the entire supply chain has to be active and the lockdown should not be there," Aggarwal explained.
All of VECV's plants are currently operational at around 25%-30% capacity, due to constraints mostly on the demand side.
The company has adjusted it to a lower scale of operations in this period, rationalised costs and cut its breakeven.
Within segments, VECV sees demand for tippers to come back first, followed by e-commerce and the rural economy.
Demand is also coming from niche sectors like tankers for LPG and oil movement, while demand for haulage continues to be under pressure. The season for school bus purchases from March-July too has been a washout this year.
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