How a Rajkot-based automaker overtook Mahindra & Mahindra in the 3-wheeler segment

While the three-wheeler industry has been floundering amid the ravages of the Covid-19 pandemic, it has also been privy to the undercurrents of a David-versus-Goliath scenario. In the past three months, Rajkot-based three-wheeler maker Atul Auto Ltd has seized market share from the automobile behemoth Mahindra & Mahindra in the three-wheeler industry.

As per the market share data released by the Federation of Automobile Dealers' Associations (FADA) - which is based on vehicle registrations - Atul Auto superseded M&M in terms of market share in the three-wheeler industry during July, August and September, when its market share stood at 2.25 per cent, 3.71 per cent and 3.91 per cent respectively. Meanwhile, M&M’s market share in three-wheelers in the same period stood at 2.00 per cent, 1.73 per cent and 1.95 per cent respectively. In August and September, Atul Auto reached the third position in the three-wheeler industry, ahead of TVS Motor Company as well, according to FADA.

Automobile dealers’ body FADA has been releasing market share data of OEMs based on vehicle registrations since July. The data has been compiled from the Ministry of Road Transport and Highways' Vahan platform, and covers 1,254 of 1,461 RTOs in the country.

Atul Auto, one of the youngest companies in the sector, began its journey in the 1970s, when the late Jagjivanbhai Karsanbhai Chandra - described as an inventor and strategist - discovered a solution for transportation problems in rural areas by inventing the ‘Chhakada’. This, the company's website claims, became a way of life for the people of Saurashtra (Gujarat). Ever since the first Chhakada was rolled out in the 1970s, more than one million Atul vehicles have been put on global roads, according to the company's website.

A singular focus on three-wheelers, provision of a complete range, strong presence in rural and semi-urban areas, as well as its stronghold in the cargo carrier segment worked in its favour, Jitendra Adhia, President, Finance & Accounts, Atul Auto, told BusinessLine , when asked about the company’s feat in the past three months.

According to its website, the company, part of the Rs 1.5-billion Atul Group, saw production turnover growing threefold in the last five years.

Meanwhile, as per market share data put out by FADA for July, August and September, the 75-year-old M&M - part of the $19.4-billion Mahindra Group - has been trailing behind players like Bajaj Auto, Piaggio Vehicles, Atul Auto, and TVS Motor in the three-wheeler segment. When asked about this, Veejay Nakra, CEO – Automotive Division, M&M Ltd, said: “During the transition to BS-6 (emission norms), our three-wheeler sales were affected. There has been some delay in launching our BS-6 range of three-wheelers, given the supply chain disruptions due to Covid-19.” 

“With the beginning of the unlock phase, coupled with the onset of festive season, we see a rise in demand, both for three-wheeler load and passenger, and are gearing up our production accordingly to meet this demand,” Nakra added.

On why M&M has fallen behind others in the three-wheeler segment, Suraj Ghosh, Principal Analyst - Powertrain Forecasts, IHS Markit, said, “Mahindra is limited by the fact that it doesn’t have a petrol variant and hence cannot compete in the compact passenger carrier segment of three-wheelers, which actually accounts for a sizeable chunk of the overall 3W market...Basically, its product offerings don’t cover the full spectrum of the three-wheeler market segments.”

Full range in 3-wheeler segment

Meanwhile, Adhia said that Atul Auto’s speciality is that it has a complete range of the three-wheeler segment. “Atul Auto Ltd is completely dependent on a single product platform, that is, three-wheelers - it is our bread and butter - we don’t manufacture anything else. One good, very unique point about Atul is that it has the complete range of three-wheelers,” he emphasised. It has products in both the 0.5 tonne and 0.35 tonne categories, a presence in both cargo and passenger carriers - coupled with almost 24 customised applications on three-wheelers - front engine and rear engine three-wheelers, as well as products in diesel, petrol, CNG, LPG and electric segments, he explained.

Soon after the success of the Chhakada in the 1970s, Chandra’s son, Jayantibhai Chandra, steered forward his father’s brainchild by making improvements in technologies. “He introduced the diesel three-wheeler ‘Chhakada’ with many new sturdy and comfortable features. Soon, 150,000 ‘Chhakadas’ were plying all over the Saurashtra region, easing transportation for passengers and goods,” the website claimed. The group’s main focus then turned to engineering similar products for the semi-urban and urban markets. Soon, other brands and models followed in both the cargo and passenger segments.

Currently, out of its total sales, 40-45 per cent constitutes sales of cargo carriers, said Adhia. “That’s really helping Atul Auto. Since we have a grip over the cargo market, we were able to survive through this period (Covid-19).” The goods carrier or cargo segment has fared better amid the pandemic, given the demand for last-mile transportation - especially of essentials - while the fear factor of the pandemic has led to a greater decline of passenger carrier three-wheelers. The industry composition of three-wheelers is 80 per cent passenger carriers and 20 per cent cargo carriers, he pointed out.

Atul Auto’s strong presence in the rural and semi-urban areas, which experienced a lesser impact of the Covid-19 pandemic, also helped the company, said Adhia.

On the company’s targets going forward, Adhia said, “We have very deep roots in the three-wheeler industry. We definitely aim to be a sizeable and decent volume-making company in the three-wheeler industry.” In its addressable market, Atul Auto has a market share of around 15 per cent, he said.

Expansion plans

Atul Auto is setting up a new production facility with a capacity of 60,000 units near Ahmedabad. It also intends to double its marketing network in the next 3-5 years, as well as take the contribution of exports to sales from the current 7 per cent to 20-25 per cent in the medium to long term. Atul Auto, which has over 220 dealerships spread across all the states of India, also intends to have a deeper penetration across rural and urban areas once the pandemic is curbed, said Adhia.

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