Indian Truck Market Report FY 2021 may be downand out at the moment. But, it is only a matter of time before it bounces back,writes Atul Chandel.

“Thepandemic too has had the worst impact on the Truck market, and it would need aconsiderable time for making things look better. Despite this, few OEMs havethought innovatively and have tried to storm the market with carefully craftedideas.”

AtulChandel, Research Director, Munich & Wien. 

The Financial year 2021 wasn’t a memorableouting for the Indian Truck Industry, as it didn't render any opportunities toexpand its customer base. The pandemic played a spoil sport by drawing anirreparable impact on this Industry by drastically scaling down the sales. Infact, the numbers too suggest that magnitude of problem faced by the IndianTruck Industry in the third Quarter of 2021 was enormous.

The total truck units sold in FY 2021 stood justa little above 0.5 million, reflecting the unending misery caused during thisyear. Even the growth rate achieved during this period was not encouraging asthe Compound Annual Growth Rate (CAGR) in this cycle was as low as -3.0 percent, portraying an overall dip in the value.

Indigenous players have always held a formidableposition in the market, and Tata Motors has never left any stone unturned thatcomes its way concerning the domestic Truck Market. They have always led fromthe front and have garnered a sprawling market presence of 43 per cent in 2021.

The growth saga of Tata has always inspired itscounterparts. Notably, its dashing comeback to the business despite facingmarket fallout of 18 per cent over the last decade only reflects its coreworking principles. However, the CAGR achieved by Tata was at -6.6 per cent.And, though the value suggests that everything isn't alright with it, but thiswouldn’t cause much of a problem to its overall growth journey.

If we take a glance at the other side of thefield comprising of other market giants of the industry, such as Ashok Leyland,Mahindra, Maruti Suzuki, Isuzu, and Volvo, then we can observe a positive trendin their growth rate, when Tata was finding it hard to even find itself a placeon the positive curve. The competitors of Tata have found their feet veryquickly in the market and have mastered the nuances of it.

This is evident from their growth curve of thelast decade as Mahindra garnered a growth of 9.0 per cent, Ashok Leyland 7.0per cent, and Maruti Suzuki saw a 5.0 per cent rise. It all seems like thesecompanies will continue to have a flawless run in the market over the comingyears.

If we continue to assess the vital points thathave led to the sprawling growth of the above-mentioned companies in thedomestic Truck industry, then few aspects will surely catch our eye. Mostimportantly, these companies took a major decision of tapping their potentialin a completely new segment and this reflects their urge to grow and conquer. Theirinnovative thought of unveiling the segment leading vehicles with a best-in-classpricing surely catalysed its paced up journey and contributed for its success.

The people who opt for procuring the vehiclesalways come up with a meticulous planning and clear understanding of the marketstrategies. Indeed, they will even have a longing effect on the manufacturersand tend to induce changes in the procurement decisions and the cycle of sale.

The extensive presence of technology andAutomobile channels have surely made the customer take to the driver’s seat andhas given them the chance to try and test all the existing vehicles in thesegment and zero in on the best. All these advancements have given Maruti,Mahindra, and Ashok Leyland an upper hand to enhance their market hold.

The pandemic too has had the worst impact on theTruck market, and it would need a considerable time for making things lookbetter. Despite this, few OEMs have thought innovatively and have tried to stormthe market with carefully crafted ideas.

If we look at the various services that truckscan cater to, then goods transit, agricultural produce, Consumer goods, Citycleaning, and E-commerce top the list. Keeping aside these conventionalservices that are being rendered, the end users are also curious aboutexploring the other side of it.

So, this has pushed the OEMs to go on a run byensuring various key factors, such as post purchase service, Technology-enabledfeatures, and Imbibing cutting-edge technology into their products withoutburdening the customer's pocket.

Tipper, Rigid Haulage, and Tractor-trailer:

As previously mentioned, the pandemic hadbrought the entire world to a standstill and absolutely jeopardized the growthopportunities of various industries. This even impacted the Tipper segment, asit managed a market share of mere 9.0 per cent at the start of 2021. Thisworsened further to 3.0 per cent by the end of the year.

‘Innovation’ and ‘Improvisation’ seem to be at theheart of any product, in any industry. The same applies for the Truck marketsegment too. When manufactures came out with a wide range of products toenhance the payload strength, the customer base started to drift towardsprocuring the Higher Tonnage Tippers so as to get a better value of Total Costto Ownership (TCO).

The unique fact about the entire Truck segmentis that it has been dominated by a single player since its inception. TataMotors, the Indian giant and exceptional manufacturer of Automobiles hasoccupied the top-notch position with the market hold of 57 per cent. Surprisingly,the second position is held by Ashok Leyland with a market presence of 29 percent.

The new Entrant, Eicher, has amazed all bytaking an appreciable leap of 3.0 per cent and has well positioned itself at 8.0per cent though its debut in the tipper segment was just over a year ago.

The market dynamics of the Heavy-duty tippersegment is no different, as Tata leads the segment with a formidable hold of 60per cent, followed by Ashok Leyland which occupies the second position with anoverall market share of 30 per cent. In the Premium Tipper segment, the luxuryvehicle manufacturer, Volvo, spearheads the show.

The Rigid Haulage segment is synonymous to salesmachine in the Truck market of India. The synonym best suits the name, as itamounts to almost 90 per cent of sales in this segment alone. Other prominentnames in the business are Mahindra, Ashok Leyland, and Tata Motors.

The rise of various new segments in the trucksector is a last nail on the coffin for few segments that is in the businessfor a long while. One such segment that is worth the mention is the TractorTrailer segment. Despite the hardships in FY 2021, Tata carried its flawlessrun here by a share of 64 per cent, followed by Ashok Leyland at the secondspot with 27 per cent.

SegmentLevel Analysis

HeavyDuty Truck (HDT):

The Sub-segment of the truck Industry didn't havea good run starting from FY 2012 to the recent 2021, as the CAGR was always inthe negative. The lone exception was for Pick-up trucks, which, at 8.0 per centCAGR, continued to impress amidst the unfavourable conditions.

The data of the last decade reflects a toughmarket condition for all the counterparts as the growth rate of HDT was at -7.0per cent. The MDT, LDT and Mini Truck have shared similar values of growth rateat a uniform level of -6.0 per cent.

The HDT had an invincible run in FY2016 as ittopped the segment with 36 per cent market share. The market dynamics suffereda complete change in FY2021, as the number lowered to 21 per cent. The rise inthe need of transportation of goods has enabled the wide usage of Mini and Pick-upTrucks.

De-growth has always haunted the Heavy-dutysegment, and this further worsened after FY2019 as the numbers suggest: 50 percent in 2019, and 15 per cent in 2020 and 2021, respectively. Even the leaderof the HDT market – Tata – witnessed a percentile slash of 12 per cent in thelast decade.

Bharat Benz, the new entrant into the segment,made it tough for Tata Motors to keep up its firm hold on the market. It indeedsnatched a significant share from its core competitor.

This market has an open arm approach todebutants in the segment, and this has caught the eye of the manufacturers whoare keen on making their entry into this segment. Even Eicher conceptualised onthis thought and was able to reap fruitful results through their bestpractises. The same can be seen when we look at the numbers which shot up from3.0 per cent in FY2012 to 7.0 per cent in FY2021, recording a commendableAnnual Growth Rate of 5.0 per cent.

Demand has hit the all-time low for the last twoyears. And, this grave problem has ceased the manufacturer’s ability to growfurther. Though the magnitude of this effect differs from company to company,Volvo however underwent the worst de-growth during this period.

MediumDuty Truck (MDT):

If one were to considering the three yearsduration from FY2016 to FY2018, Eicher emerged as the undisputed king of thissegment. However, Tata mastered the nuances of the market by the end of 2018and, within no time, they went on to replace Eicher as the key contributor ofthe segment starting from 2019 onwards. Statistics suggest that Tata is wellpositioned at the moment with an encouraging market hold of 46 per cent as ofFY2021.

One of the integral contributors in the past, Eicherhas loosened its market hold and now stands at a mere 31.5 per cent marketshare. Continuous competition has been the core underpinning of this segment,as even the Ashok Leyland had a fantastic outing by banking 9.0 per cent markethold, and also saw its growth rate clocking at 4.0 per cent for the pastdecade.

LightDuty Truck (LDT):

If we take a comparison of how the market hastransformed itself in the last decade, then the fall of Tata is a significantobservation that is worth the mention. Tata Motors, which once had a marketpresence of 70 per cent in FY2012, suffered a massive blow and conceded 14 percent of its share to other potential competitors in the segment.

Contrary to this, Eicher's emphasis on continuousinnovation, and their urge to surprise the customers with their best-in-lineproducts started to pay rich dividends, as they climbed up to 29 per cent bygarnering an exponential gain of 16 per cent market share from its previousvalue of 13 per cent. Overall, the time period from FY2012 to FY2021 proved tobe an effective outing for Eicher.

The potential performers in the segment werealso not behind in getting a substantial rise in their growth rate as SML andIsuzu saw a CAGR of 3.8 per cent and 1.2 per cent respectively, in the lastdecade.

Pick-upsegment:

This is one such segment which has absolutelyseen no stopping since the time it has come to business. Indeed, it holds thecredit of being the major seller in the Indian truck Industry. Isuzu, one ofthe established names in the segment, has always had its best day in thebusiness. Their quality in the segment is beyond any question.

Performance, on the other hand, is always powerpacked. So, Isuzu is ticking all boxes right to unravel a model by betting onall their key areas. This product from Isuzu will surely make customers speakvolumes about its ability. The company anticipates it would then be the nextbig thing in the segment.

The survival trick in the Pickup segment hasalways been newness, and the desire to bring the budgeted vehicle withabsolutely no compromise on performance. Tata Motors too is going by the book,as they have already started the thought process to establish a good hold onthe market by its wide range of products in the segment and their testedproduct ‘Yodha’.

Even Ashok Leyland is in quest for success inthe segment. And, this has led to the unveiling of their ‘Bada Dost’, keepingin mind the need of releasing vehicles where the owner can also don the hat ofa drive with very much ease.

MiniTruck:

Considering the present market scenario, theMini Truck stands tall in the segment by positioning itself firmly in number twoposition. The COVID scare undoubtedly opened up the problems for this segmentby putting an end to its expansion.

Even customers buying preference underwent amassive change during the pandemic, and this has led to the drift of customerbase from Mini truck to Pick-up with a view of opening up new avenues ofbusiness. Apparently, Pick-up truck outsmarts Mini truck in various aspects asthe former has plethora of applications.

Tata Motors has held a key position in thesegment by amassing an overall market share of 62 per cent. However, they hadto concede almost 12 per cent share over the span of last 10 years owing tonumerous reasons.

Maruti Suzuki tried its hand in this segment bymaking a surprise debut. This move worked exceedingly well for them as it madeTata and Mahindra pay out 9.0 per cent and 11 per cent market sharerespectively. Maruti is popularly known for crafting products that exactlymeets the customer expectations.

Their product positioning strategy and thespecifications they offer has always astounded the market. All these vitalfactors collectively helped Maruti to evolve as the invincible OEM across thesegment by broadening its market share to 21 per cent.

Outlook

The whole word was expecting a transformationalchange during the inception of 2020. But, there was something different in thestore for all of us. The pandemic struck a huge blow for the growing economies,and till date, the miseries and disasters caused by Covid continue to troublemankind and the globe.

This has led to the fallout of demand in all thesectors viz. Infrastructure, Mining, E-commerce, and most importantly, theAutomobile sector. All these sectors require considerable amount of time to getback the lost shine, but yet studies have forecasted that the normalcy will berestored in the coming days and the market will gain back the pace which was amajor miss for the last two years.