M&M to enter intermediate CV market

The company will make an investment of Rs 700 cr over the next three years; will also strengthen bus business

Mahindra and Mahindra’s truck and buses division aims to double its market share in the heavy commercial vehicles (HCVs) space in the coming two years, beside strengthening its buses business.

In the short run, the company is set to enter the intermediate CV (ICV) space, a category it is absent in, and is putting aside Rs 700 crore for this, over three years. “We will come up with 11 different products in the six to 16-tonne category and, thereafter, will focus on our buses business,” said Nalin Mehta, chief executive officer of the truck and bus division.

The ICV space comprises trucks midway between heavy tonnage and light ones. The majority of the allotted investment will be pumped in the second year of the project in its 700-acre factory, a new one, at Chakan near Pune in Maharashtra, which has an installed capacity of 50,000 vehicles a year on a three- shift basis.

At present, the company uses only 16 per cent of the capacity. An investment of Rs 4,000 crore has been incurred in building the plant, which mainly handles production of HCVs and ICVs, among other vehicle categories.

"Factors like the growth of e-commerce, the resulting hub-and- spoke model if the (national) Goods and Services Tax is rolled out, demand arising from the Smart Cities project and the rise in rural income will drive growth in the ICV space," said Mehta.

The company currently operates in the 15-42 bus seater category, having eight per cent market share. In the coming two years, M&M also plans to enter the markets in Kenya and South Africa, among others in the region, with its range of HCVs.

It entered the HCV space three years earlier but met with poor demand, due to the then economic downturn. Last year, the company made a new push by launching the Blazo range of tippers, tractor trailers and haulers, priced between Rs 20 lakh to Rs 33 lakh. It has invested around Rs 1,000 crore to build its HCV portfolio.

It has also come up with offers like returning a buyer's money in case the mileage commitment isn't met and a five-year warranty scheme. With that, it says it got 10,000 product enquiries and sold a little over 400 vehicles.

"In the HCV space, we are anticipating good growth this year, as the mining, construction and road sectors are performing well. Further,with the BS-IV (mission) norms to be adopted April 2017 onwards, we expect advance buying," said Mehta.

The company has a current market share of four per cent and eight percent in the HCV and LCV categories. It has also hired filmstar Ajay Devgn as the new face of its advertising campaign, featuring product and service guarantees.