Offence is the best defence

Written by Malabika Sarkar | Malabika Sarkar | Updated: May 31 2009, 04:59am hrs
Sales commercial
TATA Motors launched six new vehicles as part of its so-called world trucks range this Thursday. The company, countrys largest commercial vehicle manufacturer, has invested Rs 1,000 crore in developing the new range, which the company hopes will boost sales in India and overseas.

Mahindra & Mahindra on Tuesday launched the CNG variant of its pick-up truck Maxx Maxi, priced at Rs 3.79 lakh (ex-showroom Delhi). This is Rs 50,000 costlier than the existing diesel variant.

Eicher Trucks and Buses has introduced a new range, E2 Plus, in the light and medium commercial vehicle category. Priced between Rs 5.5 lakh and Rs 8.5 lakh, the new range has eight models that will replace the earlier range of Eicher trucks in the light and medium segment.

Suddenly, there is a buzz in the commercial vehicles market in India. Some four months after the stimulus packages announced by the Centre promised to revive demand for commercial vehicles, and anticipating further boost in demand following the second stint of the Congress-led UPA government at the Centre, leading commercial vehicle makers such as Tata Motor, Mahindra and Mahindra and Eicher Trucks and Buses have set the tempo by unveiling new products in the segment.

The year 2008 was really bad for the entire commercial vehicles segment. Towards the end, even the passenger vehicles segment began to falter. According to the data collated by the Society of Indian Automobile Manufacturers (SIAM), while the passenger car segment posted a marginal growth of 0.13%from 15,49,882 in 2007-08 to 15,51,880 in 2008-09commercial vehicle sales showed a worrisome 21.7% dropfrom 4,90,494 in 2007-08 to 3,84,122 in 2008-09. Analysts put the drop in production, domestic sales and exports squarely at the doors of the economic slowdown.

All the big players suffered at the hands of the punishing market conditions. Leader Tata Motors, which commands a whopping 60%-plus share, registered a 22% drop in sales at 2.34 lakh. Eicher slid 37% at 17,341 units; so did Ashok Leyland with sales of 47,632.

Since then, the passenger vehicles segment has worked its way out of the woods with sales picking up and new launches rolling into the market. But the commercial vehicles segment remains in the doldrumsin March 2009 it registered a 26% fall, with sales of 41,881 units, against 56,768 units in March 2008.

According to Siam, commercial vehicle sales declined 11.25% in the domestic market in April and stood at 29,842 units compared to 33,626 units in the corresponding month last year. While light commercial vehicles (LCVs) registered a growth of 28.2% at 18,819 units in April 2009 vis--vis 14,676 units in April 2008, medium and heavy commercial vehicles (M&HCVs) posted a decline of 41.8% at 11,023 units, against 18,950 units in April last year.

So, is this the right time to roll out new products Why take a risk when the proverbial green shoots look some distance away

These are not products that could be launched overnight, says, VG Ramakrishnan, director, automotive and transportation, Frost and Sullivan, South Asia and Middle East. A lot of planning and preparation go into such moves. These have been planned over three to four years in the minimum and a sudden market downturn will not stop a company from going ahead with the launch. All they can do is delay new investments by, say, six to nine months.

Abdul Majeed, auto analyst and partner, PricewaterhouseCoopers, believes that companies are trying to bring the much-needed excitement back into the market. They are definitely looking at the long term, he says. And of course the players are upbeat. Better fuel efficiency, better turnaround time and better reliability of our entire range of ligh and medium duty trucks results in a low cost per ton per kilometer and this directly increase the profitability at the customer end, says Humsa Dhir, head (corporate communications), VE Commercial Vehicles, a 50:50 joint venture between the Volvo Group and Eicher Motors. Moreover, the many variants in the E2 Plus series of Eicher trucks give the customer the choice of a vehicle exactly suited to his needs, she adds. The company currently has a share of 27-28% in the 5-12 tonne light/medium commercial vehicle segment, which is pegged at 50,000 to 55,000 units a year.

While domestic sales of LCVs improved in April, Eicher Trucks and Buses registered a decline of 24.72% in domestic sales last month at 1,401 units. Sales of LCVs declined by 7.1% in 2008-09 at 2,00,581 units as against 2,15,912 units in the preceding financial year.

Mahindra and Mahindra is the market leader in the 2 to 3 ton pick-up category with a share of 85% (2009). The company claims to have posted healthy growth despite the slowdown in the segment. At the launch of the CNG Maxx Maxi, Vivek Nayer, senior vice-president, marketing, automotive sector, M&M, said, This initiative is in line with our drive to bring environ-friendly vehicles. The new vehicle offers savings of up to 40% on fuel costs in comparison to diesel-powered 4-wheeler load carriers and can go up to 250 km without a refill.

The automobile slowdown caused by the financial crisis worldwide had hit Tata Motors' bread-and-butter commercial vehicles hard. The good news is demand for trucks in India is on the upswing since December, informs PM Telang, executive director for commercial vehicles at Tata Motors.

Overall, the industry is looking at better days ahead. Analysts predict an 8% growth for the commercial vehicle segment, against 5% growth for passenger vehicles this year.