Companies

Pick-ups hit the growth lane even as CVs lag

G Balachandar Chennai | Updated on October 19, 2020 Published on October 19, 2020

E-commerce and consumption sectors, rural markets accelerate demand

While the commercial vehicle (CV) sector continues to be weighed down by an economy in the throes of a recession, not everything is gloom and doom for the industry.

Pick-ups, a part of the small commercial vehicle (SCV) segment, are bucking the trend. The segment registered growth in Q2 and the industry expects the momentum to continue.

The SCV segment comprises mini-trucks with gross vehicle weight (GVW) of 0-2 tonne, a sub-segment dominated by Tata Ace, and pick-ups (2-3 tonne GVW), where Mahindra Bolero, Ashok Leyland Dost, and Tata’s Yodha and Intra compete. From August, the pick-up segment has seen a strong recovery. Their sales grew 6 per cent to 61,203 units in Q2. The mini-truck segment, however, continued to see sales decline, shrinking 12 per cent to 37,172 units in the same period.

“SCVs are mainly engaged in the delivery of essential daily needs such as fruits and vegetables, FMCG and dairy products.

“Online purchase has also seen a sharp spike in in the Covid era. To top it all, a good monsoon and relatively low impact of Covid in the rural areas have boosted rural demand significantly,” said Nitin Seth, Chief Operating Officer, Ashok Leyland. Mahindra & Mahindra and Tata Motors have also reported growth in the volume of their pick-ups over the past two months.

“Tata Motors’ SCVs are witnessing higher growth when compared to other segments.

“We were +2.6 per cent in August 2020 versus last year and +7 per cent in September 2020 against last year. The increasing growth in this segment is primarily on account of double-digit growth in Tata Intra and Tata Yodha pick-up,” said Girish Wagh, President, Commercial Vehicle Business Unit, Tata Motors.

Meanwhile, Ashok Leyland’s launch of its all-new pick-up, Bada Dost, at an aggressive price point, is also expected to create some excitement in the market, while intensifying more competition in the pick-up segment. “There has been a phenomenal response to the Bada Dost. The new pick-up is already seeing four-five weeks waiting period.

“Its many industry-first and best-in-class features like India's first ARAI certified 3-seater SCV, foldable backrest with collapsible hand brake lever, factory-fitted AC, best-in-class payload and better fuel economy, are creating a new customer segment of its own,” said Seth.

“The growth in SCVs has been driven by healthy demand from rural and semi-urban markets. The growth is likely to sustain in the near-term,” said Shamsher Dewan, Vice President & Sector Head - Corporate Ratings.

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Published on October 19, 2020
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