Poor performance of the manufacturing sector, which constitutes more than 75 per cent of the IIP, grew by meagre 2.2 per cent in February, as against 4.1 per cent in the same month of 2012, official data released by MSO. The mining output in February this year too contracted by 8.1 per cent, compared to a growth in production by 2.3 per cent in the same month of 2012. M&HCV (> GVW 7.51ton) segment has shown 25% of de growth while LCV (up to GVW 7.5ton) segment has shown 16% growth in FY 2012-13 compare to last FY 2011-13.
LCV segment increased its share from 58% to 68% while M&HCV has lost its share from 42% to 32%. As data released by MSO, the economic indicators across sectors remained low so cargo sector dispatches displayed negative movements and fleet utilization fell by 22-25%. Due to this trend fleet owners deferred purchase of new trucks.
Non utilisation of fleet forced them to reduce their truck rental by 5-4% during the fiscal ending March 31, 2013. However most of the fleet owners are trying to renegotiate their freight rates upwards during renewal of their contracts. Despite heavy discounts still buyers are not showing interest to buy new trucks. NBFCs/ Bankers are facing tough time for non-payment/delay of EMIs and many of fleet owners have been surrendering their loaned trucks to the financiers. Even buyback option is introduced by many truck OEM to increase its sale but still it could not impact its sales as their expectation.
OEM wise sales, Tata Motors has been badly effected by downturn in FY 2013. However still it maintain market leader position with 57% market share with 186,298 units. Ashok Leyland is also at number two from last couple of years with 51, 914 units. Mahindra Navistar which is going to became 100% subsidiary of Mahindra group also shown de growth.
Tata Motors, Ashok Leyland and Eicher are top three players in of FY 2013. AMW is having good performance in tipper segment which is around 75% of its total sales in rigid segment.
In LCV segment also Tata Motors maintain market leader position. Mahindra & Mahindra is at number 2 with 142,796 units sold. To capture this segment, M&M has made huge investment to develop suitable product portfolio.
There is difference of 30% market share gap between first and second player. M&M is trying to fill this gap by introducing new product. However their marketing strategy need a revisit. Most of their activities are only for brand building and not targeted at sales.
Market Outlook FY 2013-14:
ACG do not see foresee any major market growth for at least the first 2 quarters of FY 2013.
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Thanks “ACG Analysis Team and SIAM” for the stats and figures.