<div><div> </div><div><em>As makers of light commercial vehicles remain upbeat about sales this year, competetion among top players is set to grow, reports <strong>K Chandra Mohan</strong></em></div><div> </div></div><div> </div><div>Venkatramana Korukonda is a farmer in Chinthamadaka, Medhak district of Telangana. The village is popular for commercial crops such as beans, potato and capsicum - the vegetables that are in demand in cities.</div><div> </div><div>Venkatramana carries 450 kg worth of produce in his light commercial vehicle to deliver to the local mandi, situated 60 kilometres. He earns Rs 5 lakhs a year from the sale of vegetables.</div><div> </div><div> </div><div> </div><div>"The vehicle is my lifeline, if I paid for a logistics provider, my margins would go down by 30 per cent because of the wastage," he says.</div><div> </div><div>This is the story of farmers in prosperous agricultural areas, which have now become the primary source of revenue for the commercial vehicle industry. The sector is poised to grow at 5 per cent this year.</div><div> </div><div>Bank sources predict that the down payments made by farmers for these vehicles, which were 40 per cent in the previous financial year, could come down to 30 per cent this year because of the expectations of a favorable monsoon. Mahindra &Mahindra has taken the first gambit by investing Rs 250 crore for producing its new light commercial vehicle Jeeto.</div><div> </div><div>M&M has literally taken the fight to the market leader Tata Motors with this small truck whose payload capacity is 600 kg. The Jeeto will focus on India's growing agriculture and e-commerce (retail) growth.</div><div> </div><div>The move follows the disappointing sales of M&M's light commercial vehicles (LCVs) Maxximo and Gio over the last three years. The company has termed the Jeeto as a small commercial vehicle (SCV) and will be pitted against the Tata Zip in semi-urban centres.</div><div> </div><div>The numbers are promising although the last two years saw a drop in sales. The total market size of sub one-ton vehicles in the financial year 2014-15, according to SIAM, was 13,1455 units.</div><div> </div><div>This represented a 21 per cent drop in sales when compared to the financial year 2013-14. This was because of the fall in agriculture incomes and high bank interest rates. The estimated market opportunity is worth 200,000 units per year, according to analysts.</div><div> </div><div>"The rural economy has grown slowly, due to crop damage and unseasonal rains in the early part of the year," says Bharat Gianani, analyst at Angel Research. He adds that in the same period lower mandi prices had also impacted income. Automobile companies remain positive and believe that the economy is on an upswing. Tata Motors leads the industry with a 83 per cent share.</div><div> </div><div>The Jeeto is the first Indian small commercial vehicle to offer a range of 8 variants with a price starting at Rs. 2.40 lakh. Company executives claim that the product was the best in its class in terms of performance, economy and convenience, which enable faster delivery. It apparently gives a mileage ranging from 27.8 kilometres per litre to 37.6 depending on the variant.</div><div> </div><div>"The product is suitable for last-mile connectivity. It can be used in the e-commerce or retail industry and can help farmers transport produce to the mandi," says Jyothi Malhotra, Vice President Sales, Automotive Division. Its 307 dealerships will sell the vehicle across the country and will compete with Tata Motors.</div><div> </div><div>Sources add that M&M aims to take a 42 per cent share of the small commercial vehicle segment by the end of this financial year. The Tata Zip dominates the market because of its powerful engines. Which is why M&M wants to redefine its engines.</div><div> </div><div> "The Ace is continuing to grow because of its resale value and unit economics. Low service costs are everything for a farmer to buy an LCV," said Ravi Pisharody, Executive Director, Commercial Vehicles, Tata Motors, in an earlier interview with BW.</div>
_20241105142833_original_image_22.webp)