Small CVs poised for big leap as last mile connectivity picks up

G Balachandar Chennai | Updated on November 24, 2021

The growth prospects for the SCV market remain positive   -  Bijoy Ghosh

Slew of launches in pipeline, driven by boom in e-commerce segment

The small commercial vehicle (SCV) segment, which serves the last mile cargo transportation, is set to witness intense competition with numerous product launches in the pipeline as leading players seek to take advantage of favourable long-term growth potential in the segment, driven by e-commerce and associated intra-city consumption categories.

Quicker recovery

In the post-Covid era, small commercial vehicle segment (sub-3.5 tonne), which comprises mini-trucks [0-2 tonne GVW (gross vehicle weight)] and pick-ups (2-3 tonne GVW), reported quicker recovery than other categories and has been reporting significant growth, supported by boom in e-commerce business.

Also read: CV industry poised for growth; worst is over, says Tata Motors’ Girish Wagh

SCVs account for a major chunk of the LCV segment (below 8-tonne-goods) with more than 90 per cent share. The growth outlook remains bright due to increasing traction in the hub-and-spoke model and boom in intra-city goods movement.

For the April-September 2021 period, overall SCV volumes grew 35 per cent at 1.67 lakh units against 1.24 lakh units in the year-ago period. Of this, total mini-truck sales jumped 50 per cent at 66,656 units compared to 44,289 units in the year-ago period. Pick-ups grew 27 per cent at 167,428 units (123,607 units).

Positive prospects

“The growth prospects for the SCV market remain positive, supported largely by the requirement for last-mile transportation, which has been spurred further by the digitisation of sales channels leading to robust growth in the e-commerce segment. Additionally, over the past year-and-a-half, stable demand from rural and allied sectors has also been a positive factor supporting the demand for SCV segment,” says Shamsher Dewan, Group Head and Vice-President - Corporate Sector Ratings, ICRA Ltd.

Also read: CV market: More truckers opt for CNG vehicles on better availability amid high diesel price

All three major players — Mahindra & Mahindra, Tata Motors and Ashok Leyland — which have a combined market share of about 94 per cent in the SCV segment, are chalking out aggressive product expansion plans with slew of new product introductions, including alternative fuel and electric variants, packed with new features.

While Mahindra is the leader in the pick-up segment, Tata Motors continues to dominate the mini-truck segment.

Mahindra aims to consolidate its position with 17 new launches (including passenger models) by 2026.

“Eight of them will be electric. Also, there will be CNG options in 12 products. A lot of these products are underway already and a new pickup range will come starting from early next year, while the company is working on some new platforms. We will have a very exciting product portfolio in the last mile mobility,” Rajesh Jejurikar, Executive Director – Auto & Farm Sectors, Mahindra & Mahindra, said during a recent earnings’ call.

M&M’s proposed strategy will also include some new platforms for strengthening its position in the lower tonnage mini-truck segment, where the company is relatively weak.

Market share

With a revamped strategy, Tata Motors improved its market share in the SCV market to 39.3 per cent from 37.9 per cent in FY20. Its product and distribution-led strategy targeting each sub-segment has helped the company recover lost market share.

Its new intra range for small pick-ups and Yoddha brand for the large pick-up category are expected to help strengthen the company’s presence. “We are planning an electric model for the last mile and intra-city applications, supported by a right ecosystem,” said Girish Wagh, Executive Director, Tata Motors.

Pick-up category

Ashok Leyland has been focusing only on the pick-up category with its ‘Dost’ vehicle. Its launch of Bada Dost for the large pick-up category last year has brought in incremental volumes for the company and thereby increasing its market share. It seeks to further strengthen its presence with alternative fuel and electric variants.

Published on November 24, 2021

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