Home-grown automaker, Mahindra & Mahindra (M&M) is narrowing its focus on the fast-growing small commercial vehicle (SCV) business, as it eyes 30% market share in the segment over the next 12 to 18 months.
The rise of e-commerce and hub-n-spoke model post-GST is fuelling super-charged growth in the SCV segment, making it one of the fastest emerging in the domestic market. According to the industry data, the segment grew 43.62% in the last two years, despite the headwinds of slowing economic growth, surplus capacity, financial crunch, and the tardy infrastructure growth pulling all segments down.
Moreover, in medium-term, the SCV demand is likely to be braced by structural positives of last-mile transportation needs and pent-up requirements coming from municipalities/ULBs under the ‘Swachh Bharat’ and Smart City initiatives, according to ICRA.
The segment sold a total of 4.47 lakh units in FY17 compared to 6.42 lakh units in FY19, according to the industry data.
“Currently we have about a 20 – 23 per cent market share in the SCV segment. We are currently number two, but there is not a significant gap between the number one and number two. Our objective is to have healthy profitable growth and we want to increase this market share to 30 per cent in the next twelve to eighteen months.” said Veejay Nakra Chief of Sales & Marketing Mahindra & Mahindra, Automotive.
He further added,“In the last three years, the SCV segment has grown significantly. And hence, we thought that there is a good potential for us to create a dedicated vertical for dedicated focus in this area for this.”
In medium-term, the SCV demand is likely to be braced by structural positives of last-mile transportation needs and pent-up requirements coming from municipalities/ULBs under the ‘Swachh Bharat’ and Smart City initiatives.
To achieve the 30% targeted market share, M&M has lined-up a slew of new product launches and variants in FY’21. Also, it plans to take its channel network to 225 SCV outlets in the ongoing fiscal year from the current 170.
Mahindra & Mahindra sells e-supro, e-Alfa Mini, Jeeto, Jeeto Minivan, Supro MaxiTruk and Supro Mini Truck under its small commercial vehicle division.
“We are ready with the BS-VI line-up and will launch new products in the segment going forward. Also, we will expand the network rapidly in tier-I and tier-II cities” Nakra added.
Mahindra & Mahindra in FY18 created a separate vertical of small commercial vehicles business under which the brand sells three-wheelers, passenger carriers and load carriers below 2.5 ton and electric three-wheelers. With a team of 120 people, the vertical is headed by Satinder Singh Bajwa who is currently Vice President at Mahindra and Mahindra.
Industry experts believe Mahindra created a separate division for small commercial vehicles because the target customers for this segment are very different from the medium and large commercial vehicle buyers and the passenger vehicle customers.
Moreover, the competition is also getting aggressive with Maruti Suzuki expanding rapidly with its Super Carry, its light commercial vehicle offering. On the other hand, players like Bajaj Piaggio and TVS Motor are also planning to tap this segment with the segment leader Tata Motors also planning to consolidate the market with its next generations of ACE, Venture and Magic Express.