“ Slowdown has resulted in over 50% under-utilization of car carriers”

Much on the expected lines, the massive drop in automobile sales in the recent months has severely impacted the car carrier operators. Vipul Nanda, President, Car Carrier Association of India (CCA) and Chairman, Pallia Transport says if the situation does not improve around the forthcoming festive season, it could well become an issue of survival for many operators. Edited excerpts of a conversation with Ritwik Sinha…   

 

The automobile industry is under tremendous pressure these days and as per a latest data, this could probably be the worst slowdown for the business in the past two decades. Your fortune as car carrier operator is obviously tagged to the  industry. So to what extent your own business has been impacted so far? What is the precise scene on the ground?

The situation is turning from bad to worse. The extent of its impact can be gauged from the fact that capacity utilization has been reduced to less than 50 percent. Presently, the car carrier capacity of the Indian market is around 15,000 vehicles operated by over 100 transporters.

So how are the players dealing with a grim scenario like this?

This is an unprecedented scenario. And you can hardly plan for it because this time volumes are too low. And then it becomes double whammy when clients also try to cut price in such a situation. It is one of those rare situations wherein you can’t control either the volume or the price. What you can control is your own expenses.  What you can control is your assets- you sell them to pay your debt so that you pay lesser interest.

When you say controlling the expenditure becoming a key focus – does it also include laying off people who are employed with this industry?

You are forced to respond with such measures in a situation like this. Suppose you have 10 people in the vehicle tracking department. You may be compelled to bring down this number because vehicle movement has significantly come down. If you are your selling trucks, the drivers may have to leave. Simply put: it is a mess.

When did you start feeling the pinch? This spell of slowndown in the automobile industry is likely to last for quite sometime.

The tenure of this spell is indeed turning out to be long. It had started with last Onam.  It is the steepest decline in the last 19 years and it is hurting more because every stakeholder in the automobile value chain has big stakes now. It is an asset heavy industry. You own the car carriers which mean you own a lot of debt. And if usual business cycle is absent for a long time, many players can go bankrupt. If things don’t improve in the festive season, it would lead to a bloodbath in the next three months.

Can players in the car carrier business take any alternative route?

The slowdown is not only in the automobile business but it is slowly spreading across to other sectors. So if we try going out and align with other sectors with our vehicles, it would only result in over-capacity in other domains. It is not an option.

So as an association, do you have any plans to collectively deal with such a difficult situation?

The only thing we can do is to keep the flock together. We can approach banks and ask them to be a little lenient in our debt servicing. But will they agree? That is the question.

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