Indian commercial vehicle market to cross 1.6 million by 2016-17 says E&Y Report

The Indian commercial vehicle market witness exponential growth that is likely to double to 1.6 million units in the next five years, says a study conducted by the global consulancy firm, Earnst & Young.
By: Jayashankar Menon, Editor, Automotive Horizon
 
April 26, 2012 - PRLog -- The Indian commercial vehicle market witness exponential growth that is likely to double to 1.6 million units in the next five years, says a study conducted by the global consulancy firm, Earnst & Young. In its latest report on 'Mega Trens shaping the Indian commercial vehicle market', E&Y says the Indian commercial vehicle growth would more than double to 1.6 million, largely on the back of increase in infrastructure spend, coupled with rapid urganisation and the resultant entry of major multi-national firms in the country.

The modern day India will see the emergence in excess of six cities that have a total population of over ten million in each city and 63 cities with a projected population of one million by 2025. The consultancy firm says that the Indian market, which has witnessed the foray of global players including Daimler, Volvo and Beiqi Foton will also see a compound annual growth rate in excess of 15 percent till 2016-17. What is more, the overall CV sales in the country clocked an 18.20 percent growth in 2011-12 at 809,532 units in comparison with 684,905 vehicles in the year ago period. The sales of medium and heavy trucks logged a growth of 8.79 percent during the period under review at 299,309 units as against 275,121 units in 2010-11, while the light commercial vehicles witnessed a faster growth at almost 30 percent selling 411,460 units in the last fiscal.

According to the report, Tata Motors and Ashok Leyland are still ruling the roost in the domestic truck arena with a combined market in excess of 90 percent, while other players including Eicher making up the rest of the market share. The stakeholders across the Indian commercial vehcile horizon might as well be impacted by the rapidly changing events such as operating environment, fleet operator or manager preferences, intense competition, distribution channel, supply chain and a host of other such issues.

Emphasising the need of road infrastructure development to facilitate auto makers, Rakesh Batra, Partner and National Leader (Automotive Practice), Ernest & Young opined:  "By 2012, the expecation is that India will have six-laning of 6,500 km and a development of 1000 km of expressways. Of the 66,590 km of National Highway, only 38 percent are single-lane, leading to logistics inefficiencies as trucks can cover only 250 km per day in contrast with 600 km globally. Furthermore, the development of road infrastructure enables the vehicle manufacturers to introduce higher power vehicles. So far, the modernisation of roads under the National Highway Development Programme (NHDP) is estimated to involve a total investment of $ 47.2 billion".

Mega trends

The report further identifies six mega trends which are likely to impact the revenues, costs and profitability of participants in the Indian commercial vehicle industry. Going forward, the consultancy says the fleets  will focus on capacity utilisation to reduce operating costs and diversify customer base. Meaning, the fleet operators will opt for higher tonnage multi-axle trucks and rely on usage of telematics and will focus on the total cost of ownership. Secondly, the rapid urbanisation, improving road infrastructure and regulatory policies will influence commercial vehicle customers and manufacturers. By 2050, at least five states are likely to be predominantly urban and twelve cities in India with population of more than 200,00 are expected to get metro rail.

Global players will redefine brand position in the market while domestic companies will build R&D competence and optimise costs through outsourcing and modularisation, says the report. The key stake holders, suppliers will improve local capacity and invest in R&D while improving operational efficiency and developing an aftermarket proposition. The auto makers will tackle human resources, economic and supply chain risks through skill development, production localisation and supplier collaboration, notes the report. The truck manufacturers and n fleets produced by overseas players will induce distribution and aftermarket participants to offer value added services.

"The competition among commercial vehicle manufacturers in India will intensify as global vehicle manufacturers raise the bar in terms of technology, quality, durability and reliability, while domestic vehicle manufacturers invest to upgrade products and technology, strengthen dealer relationships and loyalty, reinforce distribution networks and build new competencies to stay afloat in the business and to maintain their market shares", the Ernst & Young report concluded. For more Indian automotive related news, visit automotivehorizon.sulekha.com.
End
Source:Jayashankar Menon, Editor, Automotive Horizon
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Tags:Indian commercial vehicle market, Ernst Young, Rakesh Batra, Tata Motors, Ashok Leyland, Daimler Benz, Volvo, Foton
Industry:Commercial Vehicle
Location:India
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