The fortunes of the commercial vehicle (CV) industry are pegged directly to the extent of economic activity and with better news on the economic front, the Indian CV industry too is recovering. The Small Commercial vehicle (SCV) segment a relatively new category with CV industry, however, poised to see significant growth in coming years.
The need for intercity goods and passenger transportation drives the demand for SCVs and the segment was created by the launch of Tata Ace in May 2005. According to a study by Roland Berger Strategy Consultants, this segment contributed 60 per cent of CV industry sales in 2013-14.
SCVs are suitable for short intra-city trips, narrow village roads, and long highway hauls carrying small loads. The segment came into being with restrictions on overloading of cargo vehicles and restrictions on the entry of heavy commercial vehicles into city. Speaking to this correspondent, Dr. Wilfried Aulbur, Managing Partner, Roland Berger Strategy Consultants said the segment had outperformed all other CV segments.
“The SCV segment grew by around 30 per cent cumulative annual growth rate (CAGR) between 2010 and 2012 and it declined by only around 1 per cent CAGR over the last two years while the overall CV industry declined by around 11 per cent CAGR over the same period.”
This category can roughly be characterized as sub 1000cc engine. It competes with three-wheelers on the basis of cost, durability and new pollution control laws. The popularity of the Tata Ace saw several players from the three-wheeler or light CV segment enter it including Piaggio’s Ape, Mahindra’s Maxximo and Gio, Hindustan Motors’ Winner, Ashok Leyland’s Dost and Force Motors’ Trump.
“The SCV industry is expected to grow at 13 per cent CAGR till 2019-20 accounting for 80 per cent of the total market by then,” Mr. Aulbur said, adding that the future of the segment depends significantly on its increasing use in unique applications for the vehicles. “While some older applications include poultry, milk and water distribution, new applications are increasingly being developed to expand the market.”
