'New multimodal transport may gain momentum'

Our Bureau Coimbatore | Updated on January 25, 2011 Published on January 25, 2011

Mr Nalin Mehta

Demand for HCVs ‘not to be impacted' by rising interest rates

As the economic development intensifies and the benefits of economic growth are felt deeper in the country, a new multimodal transport system may evolve under which a combination of rail and road transport may be used to transport goods, according to Mr Nalin Mehta, Chief Operating Officer (COO), Mahindra Navistar Automotives Ltd (MNAL), Mumbai.

He expected the demand for heavy commercial vehicles (HCVs) not to be impacted by rising interest rates on vehicle loans and growth would continue, if the country's GDP continues to grow.

Speaking to Business Line in Coimbatore ahead of the launch of the company's HCVs in the Coimbatore market on Friday, he said the company has established a plant in Chakan near Pune to manufacture HCVs on an investment of about Rs 1,000 crore.

The dealership opened here was the first in Tamil Nadu and the company would roll out distribution outlets in six centres in the State, including Chennai, Madurai, Salem and Tirunelveli.

Mr Mehta, when asked about the number of HCVs Mahindra Navistar was hoping to sell in a market dominated by the Tatas and Ashok Leylands, said MNAL had ‘come at aggressive price points' and claimed its products were ‘far superior' to what was available in the market.

The company was, however, initially aiming at ‘acceptance of the product' and it was ‘right now not focussing on numbers' but was keen on customer satisfaction.

He said the company started ‘seeding sales' of its HCVs about ten weeks back and about 300 HCVs have already hit the roads. The goal was to reach a sales volume of 50,000 vehicles in the next three to four years.

The MNAL COO said the company was also planning to come out with medium commercial vehicles and the number of 50,000 units he wanted to reach included MCVs also. The total domestic commercial vehicles market boasts of a volume of about four lakh units.

In Q3 of the current fiscal, the commercial vehicle industry had grown at over 30 per cent. The growth of the industry was ‘deeply linked to GDP'. If GDP grew at nine per cent, the industry would grow at 15 per cent. The HCV market was growing at the higher end of the segment and the 25-tonne and 31-tonne capacity vehicle markets were good. The company was planning to launch 40-tonne and 49-tonne capacity HCVs and also a 25-tonne tipper.

Freight movement

Commenting on the pattern of freight movement, he said at present the ratio of freight movement through trucks and through rail may be 1:1. The economic growth and consequent growth in consumption, not only in select pockets but deeper into the country, have seen a growth in road transport because only it could transport goods point-to-point. The intense economic and consumption growth may lead to the evolution of a new multimodal system of road-rail-road freight movement in the country.

Asked about the impact of rising interest rates on bank credit on the offtake of HCVs, Mr Mehta felt that the impact would be minimal. Though there could be negative sentiments, the demand would continue if the GDP growth was maintained since the demand for commercial vehicles was closely linked to economic growth.

Toll rates

Mr Mehta, when asked about the grouse of the goods transport sector about the high incidence of toll on highways, declined to comment on the justification of it when the Government was also levying a road cess on fuel. But he believed that the toll rates were high and supported the claim of the transport industry that the toll rates were ‘unreasonable'. He wanted the Government to bring down the toll charges to a ‘reasonable level' so that the industry grows.

He said the company has emerged as a force to reckon with in the school buses segment with specially designed vehicles to transport school children and MNAL would enter the larger buses market after about two years.

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Published on January 25, 2011
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