The industry is already reeling under negative growth in the current fiscal and the first half figures released by SIAM reveal a 6 per cent decline in volumes. Total industry sales declined to 63,482 units in the first six months of the current fiscal as against 67,495 units in the corresponding period of the previous year.

A price increase could further dampen the demand but the industry officials say they have little choice. Their margins have come under severe pressure consequent to the launch of Euro I vehicles. Poor demand forced them to absorb almost all the additional cost of a Euro I version and this has been compounded by the recent increase in diesel prices which has pushed up the cost of inputs.

Even after the current round of increase, the manufacturers would not be in a position to pass on fully the additional cost incurred for a Euro I compliant vehicle. "We are attempting to regain our margins in stages as the market conditions are not conducive for any steep hike," they say.

The freight rates continue to remain flat and industry experts do not expect any revival before mid-January when the next round of harvesting will take place. Marginal increases, if any, in select markets has not even covered the hike in diesel prices. In fact, these factors have brought about a perceived shift in the demand in favour of multi-axle vehicles. During the first six months their sales have jumped by about 5 per cent.

Better cost per tonne kilometer has forced many large fleet operators to go for higher tonnage vehicles. Poor realisation and resultant cash flow problems have ensured that individual owners and small fleet operators postpone purchases so much so that the industry volume of a 16 tonne truck has declined to 22,250 units (25,700 units) in the first six months of the current year.

Manufacturers are reworking their product mix to meet this change in demand pattern. ALL has increased the production of multi-axle vehicles and has in fact, created additional capacity to produce 35 tonne vehicles at its Ennore factory. The company reportedly has a waiting period for some of its higher tonnage products.

In view of the lower numbers, manufacturers have also inter-changed the 16 tonne vehicle assembly line to produce passenger chassis. The passenger segment has witnessed a 52 per cent jump in demand in the first six months of the current fiscal.