Mahindra and Mahindra (M&M) sees the high operating costs facing transporters as an opportunity to sell more of its high tonnage trucks as the latter boasts of better fuel and operational efficiency as well as lower cost of ownership.
This, along with other factors such as buoyancy in infrastructure and construction projects as well as a good economic growth, will help commercial vehicles sustain the strong run till fiscal 2020, said Vinod K Sahay, chief executive at Mahindra Truck and Bus division. The BS-VI emission norms will kick in from 1 April 2020. Nearly 5 million trucks have joined protests since Friday against the introduction of the e-way bill, exorbitant toll collection at plazas and for including diesel in the goods and services tax (GST) ambit.
On Tuesday, marking an entry into the 150,000 units per annum intermediary commercial vehicles (ICV) segment, Mahindra unveiled the new range of commercial vehicles under the Furio brand.
With a gross vehicle weight of 6 tonne to 16 tonne, 21 models from the new platform meant for varied applications will be rolled out by M&M over the next two years. Developed at a cost of Rs 6 billion, the new range boasts of better driving comfort and ventilation, among others. The Furio is the first segment of products that have been designed by Pininfirina, the iconic Italian design house which Mahindra bought in December 2014.
Mahindra claimed that its entry into the ICV segment makes it the only manufacturer in the world to have presence in the complete range of goods carriers segment ranging from a three-wheeler to a 49-tonne heavy duty truck.
“Overall, the demand has been very strong. But there is always a fear of the unknown in the CV industry. Large operators are keen to modernise their fleet before BS-VI kicks in. They want to ensure they have a modern fleet, comprising BS-IV vehicles, as the resale value of trucks that are behind BS-IV will go down further with the implementation of the new norms,” said Sahay.
Since the transporters do not want to be saddled with too many old vehicles that will fetch them lower resale price, they are looking at replacing at least 80 to 90 per cent of their fleet.
Sahay, however, conceded that the ambiguity around the new axle regulations have created uncertainty in the short to medium term.
“Most of the regional transport offices have their own way of interpreting the regulation,” he said, adding that there is not enough clarity on whether it is also applicable to existing vehicles. While it’s a welcome move, but vehicles can’t be re-engineered overnight as they will need modification on the suspension, braking, steering and will need bigger tyres. It can otherwise have safety implications, he said.
M&M is a challenger in the heavy duty segment where rivals Tata Motors and Ashok Leyland have a headstart. In the segment, these two companies
sell 70 per cent of the trucks. Mahindra entered the segment in 2010 through a joint venture with US-based Navistar.
Subsequently, it bought out the partner’s stake in December 2012 after the troubled American truck maker took a call to exit the Indian market amid mounting losses and cost cutting initiatives, globally.
Since then, M&M has sharpened its focus on the business and turned it around in fiscal 2018.
In the June quarter, Mahindra sold 3,164 heavy duty trucks under the Blazo brand against 1,416 units a year ago, increasing its share in the segment to 4.02 per cent against 3.55 per cent a year ago, according to the Society of Indian Automobile Manufacturer (Siam).
Fuelled by a combination of factors that included last year’s low base and a pick-up in infrastructure and construction business, sales volumes in the heavy duty trucks segment in the country jumped 97.2 per cent to 78,666 units from 39,872 units in the same period a year ago.