Geared up for long haul in M&HCV market
Mahindra & Mahindra Ltd. has reaffirmed its commitment to its truck and bus division, renaming the erstwhile Mahindra Navistar Automotive Ltd. as Mahindra Trucks and Buses Ltd. (MTBL), which is a wholly-owned subsidiary and part of the $16.2 billion Mahindra Group. Subject to regulatory approvals, the company also intends to demerge its trucks and buses operations from MTBL into Mahindra & Mahindra to derive greater synergies. It also has announced plans to invest Rs. 200 crores to further strengthen its existing product line-up and start exploratory work for new product lines that could lead to further capital infusion of over Rs. 300 crores in due course.
Mahindra Trucks and Buses Ltd. has also announced new branding for its heavy commercial vehicle range. The multi-axle trucks will now be called Mahindra TRUXO 25 and TRUXO 31, Tractor Trailers will be called Mahindra TRACO 35 and TRACO 40, and the tippers will be called Mahindra TORRO 25 and TORRO 31.
Speaking on this new development, Dr. Pawan Goenka – President Automotive & Farm Equipment Sectors, Mahindra and Mahindra Ltd., said: “We are fully committed to our commercial vehicles business and intend to focus on running the LCV, Truck and Bus business as a separate division post the proposed demerger, with the objective of growing our presence in the Indian commercial vehicle industry. We plan to invest significant resources over the next few years which will help us strengthen our existing product range and refurbish the current LCV range. Exploratory work has also begun for the introduction of new products that will help address the ICV and MCV segments in the 7.5 to 16 ton GVW category”.
Mr. Nalin Mehta, Managing Director and CEO, Mahindra Trucks and Buses Ltd., observed: “The new nomenclature and rebranding demonstrates our long-term commitment to the commercial vehicle business which has the full support of the Mahindra Group. While our name has changed, what remains unchanged is our determination to deliver on our customer’s evolving needs. With a powerful range of products, including HCVs, LCVs and buses, and a continued focus on breakthrough innovations we will continue to deliver market-leading performance and enhanced products and services for the Indian transport industry”.
Today, with over one lakh LCV trucks and buses and more than 8,000 HCV trucks on Indian roads, the company services them with a 24×7 service network of more than 1,591 touch points that includes 57, 3S dealerships, 271 authorized service points drawn from other dealers within Mahindra’s Automotive and Farm Equipment Sectors network and nearly 1,263 roadside assistance points strategically located on important trucking routes. This network will be further expanded by leveraging synergies following the demerger of operations.
Pioneering initiatives
• The 5-years or 5 lakh km warranty, which is transferrable and an industry first
• For tippers, the company has launched on-site warranty and has also rolled out an attractive AMC package
• Offers such as up to 100 per cent finance on chassis and up to 5 year loan tenure
Interview with Mr. Nalin Mehta
How is business at Mahindra Trucks and Buses following Navistar’s exit from the JV?
The industry has gone for a downward spin which has lasted longer than we had anticipated. There has been de-growth of nearly 45 per cent in the HCV segment in Q1 of the last two years. Despite the slowdown and considering the fact that we are a new player in this segment and there is growing competition in the market, we have been able to maintain our overall market share of close to 3.5 per cent in the HCV segment.
What have been your strong points during this tough phase?
We have identified some customers as national key accounts, of which around 38 per cent have placed repeat orders which is a big boost to our confidence. Some of our customers have even placed two to three repeat orders.
Another important positive for us is that we have been successful across different application segments such as cement, steel, coal, port operations and market load operations.
We are the first company in the industry to offer five-year guarantee which is transferable in case there is a change of vehicle owner. We have introduced an AMC model for highly demanding operations such as transportation of heavy materials like granite, which is another industry-first. All these arise out of the confidence we have in the strength and durability of our products.
The collaboration between Mahindra and Navistar had extended beyond truck manufacturing, including work on engine development, tapping export markets, and Navistar sourcing Mahindra components for its global requirements, to name a few. Following Navistar’s exit from the JV, what is the current status of the collaboration?
We have to give due credit to Navistar for its support and the level of confidence and co-operation while working with us. We are now independent of Navistar following our takeover of both the truck and engine JVs, though we still share a very cordial relationship with them. There is no major change in the product as a result of the acquisition since we have developed the product range together with them. For engines, we have a permanent technology assistance agreement with Navistar, and will continue working with them if required.
As for exports, there is no change in our plans following the rearrangement. We are currently testing our products with Navistar in South Africa and other right-hand drive countries in the African market, following which we will explore other markets as well. The global component sourcing from Mahindra by Navistar will continue since it is a completely independent operation.
How far have your dealers and customers responded to this change?
Our dealers and customers are happy with the change. With the intensity of competition in the market and the current downturn, our customers have become a lot more positive following the takeover, which further highlights our long-term commitment to the CV industry.
Mahindra has very strong brand equity as a trustworthy and ethical organization with a track record of successful products, delivering very good customer satisfaction over the years. We are a home-grown player. This adds to the confidence and comfort level of our customers. Also, we are now free to have a higher degree of synergy with our parent company M&M, which means we could leverage on our network of 1,000 tractor dealers and 400 automotive dealers across the country to support our customers, in addition to our own service centres and touch points.
What is the product range offered by Mahindra Trucks and Buses currently and how many vehicles did you sell in FY13? Are you coming up with any new launches this year, and can we expect a foray into the HCV bus segment by Mahindra?
On the HCV side we have the 25, 31, 35 and 40 tonners, and on the LCV segment our range is from four-and-a-half to seven-and-a-half tonne. We are working on many new variants and have recently launched a tipper with bogie suspension. On the integrated applications side, our factory-built reefers, bulkers and concrete mixers have been seeded in the market.
In buses, our new Cosmo range has been well received. We have been a dominant player in the school bus segment, and with the Cosmo, we have recently bagged a breakthrough order for 20 buses for staff transportation in Pune. The Cosmo is designed with better suspension systems to offer superior comfort, safety and overall customer and driver experience. It comes in two variants – the 32-seater and the 40-seater – and we will be bringing out a smaller range in future.
In FY13, we sold over 3,500 HCVs and about 11,000 LCVs. Despite the CV market falling by nearly 30 per cent during the fiscal as compared to the previous year, we managed to hold on to our market share by performing well in different segments and market across the country. In terms of new products, we will come out with the 49-tonne tractor trailer at an appropriate time, may be during Q1 of FY15. As for HCV buses, we are not ready with the products yet, but we have every intent of doing it and will definitely invest in the segment.
What is your take on the Indian CV industry and what would Mahindra’s role be in this space in the coming years?
We will continue to invest in this business. The Mahindra Board is confident about the potential of the CV industry, though the current scenario is not very encouraging. We have faith in the long-term prospects of the CV sector, because the GDP growth of the country is largely correlated to the CV industry growth. So, if one has faith in India, then one must have faith in the CV industry as well.