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Small commercial vehicles heat up the automotive industry

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The Indian market for small and light commercial vehicles is all set for a robust growth at a CAGR of 18.5 per cent for the next five years, with sales doubling by 2015-16. Major players in this category include Tata Motors, Mahindra & Mahindra, Ashok Leyland and Force Motors, among others. In recent times, the industry has witnessed a push with even global brands like General Motors and Renault mulling to set shop in this space.

According to a research conducted by Frost & Sullivan research agency, economic changes, government policies and technical developments have been the key drivers for the growth of this industry. In fact the research says that the small commercial vehicle (SCV) and light commercial vehicle (LCV) market in India is the fastest growing in the world and is expected to continue growing for the next 5-10 years. For the year 2010-11, sales of small and light CVs in India stood at 353,620 units and expected to go up to 827,920 units by 2015-16. SCV goods carrier is expected to account for around 70 per cent of this volume.

The agency further states that though the market share of the small and light commercial vehicles is increasing, on the other hand, there is a decline in the shares of medium commercial vehicles. This trend is intensified by many factors. For instance, the restriction on medium and heavy CVs entrance into metro cities has made it necessary for logistics companies to procure SCVs and LCVs for within-city delivery of goods. Availability of low cost LCVs with high power and gross vehicle weight (GVW) capacities has also eaten the market share of MCVs.

However, the entrance of global CV majors into the Indian market through joint ventures with local majors is expected to make it very competitive, with many new and better products hitting the market. Nonetheless, local majors like Tata Motors, Ashok Leyland and Mahindra & Mahindra will continue to dominate the market due to their widespread network in India and increasing acquisitions abroad.

Frost & Sullivan Automotive Research’s Analyst feels that as competition increases, it is important to strategically position products as early in their lifecycle as possible to capitalise on the market trends. According to the Analyst, designing the right product to be placed strategically in the market is critical for the long-term growth of the OEMs. The best combination of product and partner will ensure technological superiority a better market share of the OEM.

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