M&M sees potential for 50% growth in heavy vehicles
15 June 2016
Mahindra & Mahindra sees the planned new emission norms, revival in road construction, debottlenecking of the mining sector and the expected implementation of the Goods and Services Tax (GST) as helping the commercial vehicle sector to grow by as much as 50 per cent in the current year.
"We are anticipating growth to zoom up to anything between 20 per cent and 50 per cent in the heavy commercial vehicle segment with the proposed cash for clunkers scheme, likely pre-buying before Bharat Stage 4 emission standards kick off in April and the expected implementation of the GST regime plus a good monsoon," Nalin Mehta, managing director and chief executive officer of Mahindra's truck and bus division, said on the sidelines of the launch of Mahindra's Blazo range of HCV trucks in Kolkata.
The transport ministry has recently floated a concept paper for the cash for clunkers scheme, formally being called the Voluntary Vehicle Fleet Modernisation programme that plans to incentivise people to replace old vehicles with Bharat Stage 4 compliant vehicles.
The expected benefit from such a scheme would be highest for heavy trucks as compared with light commercial vehicles or passenger cars.
"Implementation of scheme for medium & heavy commercial vehicles would result in 17 per cent reduction in CO emissions," the concept paper said, adding that benefits for LCVs and passenger cars would be 4 per cent and 2 per cent, resprectively, in CO emissions.
Mehta's growth forecast range is broad as factors like how monsoon fares and whether GST gets implemented by April are still uncertain.
"If these conditions are satisfied, growth could touch 50 per cent," he said.
Last year the HCV market grew by 32-33 per cent.
There are other factors too helping the growth of heavy commercial vehicles.
"There is positivity in the economy with mining and construction activity going up, road construction taking good shape, debottlenecking happening in coal and iron ore sector."
Factors like the ecommerce boom triggering a surge in demand for last mile connectivity coupled with planned smart-cities reworking transport networks would help revive the demand for intermediate size commercial vehicles.
"We feel the ICV category will grow because of demand led by the boom in e-commerce sector. Second, the hub-and-spoke model to be adopted by transporters for secondary transportation needs would grow with growth of small cities and implementation of smart city scheme," he said.
In the ICV segment, M&M is planning to launch 11 new models in the 8 tonne to 15 tonne capacity within two and a half years.