is beautiful and so are Small Commercial Vehicles (SCVs). The SCV segment is
the largest segment within the Commercial Vehicle industry with sales of
approximately 4,32,000 units in FY2014 contributing to 60pc of the overall
industry. Now this SCV industry is expected to grow at 13pc CAGR till FY 2020
accounting for 80pc of the total market, according to a recent study by Roland
Berger Strategy Consultants.
Mahindra & Mahindra and Tata Motors have a presence across all sub-segments
in the SCV segment. In the gross vehicle weight (GVW) of less than 1.5 tonnes,
Mahindra has its Gio vehicle, Tata Motors has Zip and Piaggio its Porter 600.
In the GVW 1.5 tonnes to 2 tonnes, Mahindra has its Maxximo, Tata Motors is Ace
and Piaggio its Porter 1000. The GVW 2 to 3.5 tonnes is divided into the mini
truck segment and the pickup segment. The mini truck segment has the Trump 40
from Force Motors, the Bolero maxi truck from Mahindra, the Superace from Tata
Motors, the Dost from Ashok Leyland and the Winner from Hindustan Motors. In
the pick up segment there is the Trax pickup from Force Motors, the Genio and
Bolero pickup from Mahindra and the 207 and Xenon from Tata Motors.
the passenger carrier segment there are models like the Geo and Maxximo from
Mahindra, Iris and Magic from Tata Motors and of course the Omni and Eeco from
Berger Strategy Consultants is a global consulting firm, a top player in the
premier league of international consultancies. They serve top clients on
challenging assignments in the global market.
Wilfried Aulbur, Managing Partner at Roland Berger Strategy Consultants India
noted that the SCV segment has outperformed all the other commercial vehicles
segments and now accounts for more than 60pc of the industry. OEMs in the SCV
segment need to focus on creating the demand for SCVs by developing newer
applications. They also need to understand their customers’ needs and liaise
with government authorities in order to further promote SCV Passengers, he said
to the study, it is the need for intercity goods and passenger transportation
that drives the demand for SCVs. The SCV segment was established in 2005 with
the launch of Ace truck in the sub 2 ton category by Tata Motors, which has
considerably grown since then. The segment grew by around 30pc CAGR between
2010 and 2012 and it declined only by 1pc CAGR over the last 2 years while the
overall industry declined by 11pc CAGR, during the same time, the study
future of the SCV segment depends significantly on the rise of unique
applications of the vehicles, said the report. OEMs could augment the current
demand by continuously developing newer applications and educating the
customers on the benefits of using SCVs. New applications are being developed
to expand the market prompting newer customers to buy SCVs. Poultry, milk and
water distribution industries are some of the new applications that have been
witnessed over the last few years, says the study.
study clearly mentions that the SCV Cargo segment has outperformed SCV
Passenger segment driven by growth in the 2 Ton – 3.5 Ton category which
includes the successful Bolero Maxi Truck.
passenger SCV faces tough competition from 3 wheelers which account for more
than 85pc of the segment. Also, the study mentions that there is competition from
MPV/SUV for customers looking for comfort whereas soft top vehicles are more in
demand for shared taxi applications. The SCV passenger segment suffered due to
high delinquency rate and limited government support in terms of issuance of
product launch, Ace has remained the market leader in the <2T segment. The
0.5T payload category competes directly with the 3 wheeler vehicles and is
priced between the 0.75T segment and the 3-Wheelers. However, it has not
managed to create a threat for 3- Wheelers as the 0.5T vehicles cost at least
40pc more than 3-Wheelers. Piaggio regained its market share with the launch of
the Porter series – the Ape truck failure mainly attributed to the product
related issues, the study said.
3 wheeler cargo segment has increased by CAGR 1pc over the last 5 years.
by 2.5pc last year. This segment though faces more competition than 3 wheeler passenger
since there are no regulations in terms of permits. However, they have managed
to sustain their volumes since they also cost 40pc less than the SCV cargo entry
range vehicles (For eg: Tata Ace Zip). Also Piaggio continues to be a market
leader in the 3W cargo segment and now accounts for 52pc of the market. Atul
Auto has been a success story, says the study. It has gained 10pc market share
over the last 5 years driven by the launch of rear mounted engines and their
focus towards Tier II & Tier III cities.
dominates the pick-up segment with its products derived from SUV/ MUV platforms.
M&M has also managed to attract customers from less than 2T category by
keeping the price gap between Bolero Maxi Truck and lesser tonnage ACE to less
than Rs 39,000 as a result of which it has gained 12pc market share over the
last two years. Most OEMs provide loans through their financing arms in order
to increase penetration in this segment
1.5-2T truck customers are shifting to Bolero Maxi Truck (BMT) due to the
Price differential: Tata Ace which is a market leader in sub 2T category is
only cheaper by less than Rs 40000 from Bolero Maxi Truck
Product differential: Incremental product improvements make Bolero Maxi Truck
even more attractive
Pay load increases from 1.5T to 2.5T
Engine displacement increases from 705 cc to 2523 cc
Power increases from 16 HP to 62 HP
M&M also has managed to launch several
customer centric programmes in order to retain and grow SCV customer loyalty for
example: In May 2014, M&M launched Uday under which following benefits are
being offered to customers:
Discounted mobile recharge coupons
Accidental insurance (upto INR 2 lakhs)
Referral bonus in the form of free service benefit
Discounts on labor and spare parts
first product from the Ashok Leyland Nissan Joint Venture – based on the Nissan
Vanette was the commercial launch of Dost in September 2011.
It was a phased launch covering only 6 states in the first few months. Dost
product upgrade in July 2013 was done to marginally increase engine power and carry
out cosmetic changes such as headlight, tail light, guard, steering wheel,
instrumental cluster, dashboard and rear ventilated glass. The commissioning of
a new plant for the Dost has been delayed due to the current market slowdown. The
plant will have a capacity of 150,000 units once completed. Passenger carrier
(Dost Express) based on the same platform already under trials, says the study.
Ashok Leyland plans to have annual sales of around 45,000 in the next couple of
study further mentioned that customers are increasingly preferring soft top 4W
vehicles over the conventional 3W for urban share taxi application. Hard top
vans are being replaced by MPVs as end users demand more comfort. As a result,
both Tata Motors and M&M have managed to grow their market share. Tata
Motors owns more than 30pc of the market. However, 4Ws have not managed to topple
3Ws as they cost 40pc more than 3W and weigh almost double making them less
3W Passenger segment has increased by CAGR 2.4pc over the last 5 years.
However, it has declined by 13pc last year. This segment continues to remain
highly regulated with most routes requiring permits from government authorities.
Bajaj Auto continues to be a market leader in the 3W passenger segment and continues
to account for 49pc of the market. This segment has managed to keep the competition
off from SCV Passengers mainly due to the price gap (40pc less than SCV
Passenger). Also, they enjoy strong lobbying with the government bodies through
the investment front, the study pointed out that Isuzu is making an investment
of Rs 3000 Cr. for production of both SUVs and LCVs (pickups). The plant in
Andhra Pradesh will have a capacity of 100,000 units per annum. Of the Ashok Leyland Nissan
JV total investment of Rs 2500 Cr. Around 50pc has been spent already. The plant
will have a capacity of 150,000. Tata Motors will be making an overall
investment of Rs 1500 Cr. for FY14-15. The investments will only be for new
product development. No additional capacity is being planned. Mahindra will invest
Rs 250 Cr. for expanding capacity in Andhra Pradesh for SCV and PV. An additional
Rs 500 Cr. will be invested for new product in ICV and LCV product refreshes. Eicher
will invest Rs 250 Cr. in the JV with Polaris. Here there is a potential for additional
investments for own SCV models, the study concluded.
Picture courtesy Roland Berger Strategy
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