Commercial Vehicle Might Get Impacted Because of Rising Fuel Prices
As per the rating of Fitch, It was concluded that the rise in fuel prices might impact commercial vehicle operators in the country, leading to auto loan defaults. Currently the diesel prices averaged at Rs 67.4 per litre in June, 26 per cent higher than a year earlier and 50 per cent than the January 2016 level in Delhi.
The economists simplified the cycle and explained that the upward pressure in fuel prices has stemmed from the recovery in global oil prices and depreciation in the rupee. Rupee has fallen by almost 7 per cent against the dollar since the year 2018 has started. This is being disclosed by Fitch rating agency.
Since January 2016, freight rates have so far not kept pace with fuel price increases, rising by less than 15 per cent, which is causing stress for commercial vehicle operators, for whom fuel accounts for a significant proportion of overall costs.
The agency also went on saying that the large numbers of borrowers in the commercial vehicle segment are small operators that depend directly on their vehicles for income, and some could find it difficult to make repayments if their margins continue to be squeezed.