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10
MOTORINDIA
l
September 2012
Changing dynamics in the
Indian CV segment
However an extended period of European readjust-
ment, slower growth in key markets such as the US
and China as well as a period of misguided policy deci-
sions in India lead to significant short-term challenges.
As shown in figure 1, quarterly GDP growth has come
down to an unsatisfactory level of 5.3 per cent, the In-
dex of Industrial Production (IIP) is weak, inflation and
interest rates are high as is the fiscal deficit, and business
confidence is at a record low.
This is very well reflected in a contraction of the
MHCV market. Sales this financial year have fallen
by about 13 per cent. LCVs have grown by 18 per cent
driven by strong demand in the sub-3.5T segment, while
the 3.5-7.5T segment has witnessed a significant con-
traction.
Market weakness coincides with a dramatic increase
in competitive intensity. From a duopolistic market,
India has evolved to a stage where nearly every inter-
national player of repute is present across segments,
as shown in figure 2. While some new entrants such as
Scania or Hino follow niche strategies, all other entrants
– MAN, Mahindra Navistar, AMW, Volvo-Eicher and
BharatBenz – have volume aspirations.
As figure 3 shows, new players have made their pres-
ence felt and somewhat reduced market shares of the
dominant players. However, aspirations regarding mar-
ket share have perhaps not been met so far. Ambitious
targets – BharatBenz’ strategic objective to become the
No.2 in the Indian commercial vehicle space or Mahi-
ndra Navistar’s announcement to grow to 50,000 MH-
CVs over the next few years – are clear indications that
competitive intensity will remain high over the next
auto industry
By Dr. Wilfried Aulbur, Managing Partner, Roland Berger Strategy Consultants Pvt. Ltd., Mumbai
T
he mid- to long-term pros-
pects of the Indian com-
mercial vehicle market are
encouraging enough. Growth for
MHCVs stands at a CAGR of six
per cent over the last five years
and for LCVs at a very impressive
CAGR of 21 per cent.
Dr. Wilfried Aulbur