Market Share Trends in The Indian Commercial Vehicles Market

In my previous post I looked at the market share trends in the Indian passenger vehicles market and the factors affecting the market share of each OEM. I continue in this vein for the present post and explore the market share trends of the commercial vehicles market. As in the previous post, I first explore the trends graphically as given below, and then seek explanations of what has created the trends displayed thereof, OEM by OEM.

Tata Motors Market Share Trends

While Tata Motors had a formidable market share of 43% in the Apr-Nov 2016 period, this is a far cry from its once mighty leadership position with 58% in 2010-11. The Apr-Nov 2016 market share can also be seen to be around 4% lower than the CY 2015 figure. The reason for this reduction is said to be the chipping away of its market share by the newer and smaller players such as Volvo and Isuzu, although more intense competition by the larger players such as Ashok Leyland and M&M are also cited.

Tata Motors’ market share is highly unevenly distributed between the two segments under the commercial vehicles sub-sector It has a 50% share of the Medium and Heavy Commercial Vehicles (M&HCV) sub-segment while having only a 3% share of the Light Commercial Vehicle (LCV) category. Competition in different sub-segments have also come from different competitors. In the M&HCV sub-segment, it was Ashok Leyland who grew at the expense of Tata Motors. While the former gained 3.45% market share in the sub-segment in 2015-16, the latter saw its share decrease by 2.22%. In the goods LCV category, M&M is believed to have snatched market share from Tata Motors, while in the passenger LCV category, it is Force Motors whose advance has been to the detriment of Tata. As can be seen from the following graphic, market share losses for the company has occurred in in all the categories. Data has been taken from an article in Business Standard, available online.

  

Mahindra and Mahindra (M&M) Market Share Trends

Mahindra and Mahindra dominates the LCV segment with a more than 50% market share in the load carrying LCV segment. Whilst this category was dominated by Tata Motors in the past, M&M has reduced it to having only a 37% share, through the wide array of products it offers across the load capacity spectrum within the category. However, when it comes to the passenger carrying LCVs, Tata Motors has an 85% market share. But the dominance of load or cargo over passenger in the LCV segment means that even for the LCV segment as a whole, Mahindra has a 49% market share.

Where it has immense room for growth is the M&HCV sub-segment. It had around a 2.15% market share in the goods carrying M&HCV category in the April 2015 to January 2016 time period. The market in this category was then dominated by Tata Motors with a 55% market share and Ashok Leyland with a 30% market share. As of August 2016, M&M still claimed a market share only in the low single digits, while announcing plans to double that in the next two to three years. It is betting on its Blazo range of trucks, the promotion of which involves a first in the industry mileage guarantee, which is supposed to have paid off, although not by much if market share change is considered.

In the commercial vehicles segment as a whole, the company had a market share of 26% in the time period April to November 2016, which was a percentage point less than CY 2015, possible because Tata Motors started reclaiming market share in the LCV segments with new launches around that time. However, prior to this CY 2015 had registered a two percentage point increase in market share over CY 2014.

Ashok Leyland Market Share Trends

As discussed earlier, Ashok Leyland has been growing at the expense of Tata Motors in the M&HCV sub-segment. In the goods M&HCV category it grew its market share further by 1.5 percentage points in the first nine months of FY2016. Good results for the company in terms of sales came in from the tipper product group whose industry volume grew by 45% in the same period and in which Ashok Leyland was able to grow its market share by 5%. As can be seen from the graphics, April to November 2016 period saw a market share increase of 4 percentage points for Ashok Leyland in the commercial vehicles segment. Apart from expanding its sales and distribution network beyond the Southern states where it holds maximum sway, Ashok Leyland’s growth has come also from having long-term contracts in the infrastructure space which has seen good growth.    

VECV Market Share Trends

VE Commercial Vehicles (VECV) is a 50:50 joint venture between Volvo and Eicher to produce commercial vehicles in the M&HCV sub-segment as well as distribute Volvo’s trucks in India. Sales for Eicher branded products and Volvo branded products are reported separately. As can be seen from the graphic, VECV Volvo sales is a negligible part of the market whereas VECV (Eicher) is more significant. VECV (Eicher) can be seen to have had a 7% market share in the Apr-Nov 2016 period, which was 100 basis points better than the CY 2015 market share. The increase has come because of the improvement in market shares in both the heavy commercial vehicles space through sales to mining and construction which picked up in a big way in 2016, and also improvement in the sales of school buses. Its school buses come with the option of AC and GPS. This has translated to a market share of 18% for the company in the Intermediate Commercial Vehicle (ICV) Bus market in India in FY16. Its buses in the M&HCV segment have won orders from the state transport organizations of Gujarat, Kerala and Andhra Pradesh, helping to more than double sales year on year in FY16. Coming to the non-passenger side, introduction of new products to make its presence felt in all the segments of the heavy duty truck market have helped it increase sales by 26% in the first half of FY17.

Force Motors Market Share Trends

Force Motors has been maintaining a market share of a little under 3.5% throughout the time periods depicted in the graphics. It overtook the passenger LCV leadership position from Tata Motors in FY2015 and is holding on to it. Its use of the monocoque design, not usually seen in LCVs but which gives better performance and comfort, is said to be the cause of its popularity. On a year on year basis, it increased its sales by around 10% in the first half of FY17. It is limited to this market share possibly due to its inability to diversify successfully in to the M&HCV space, although it has made such efforts, for instance launching an intra-city bus in February 2016 and announcing plans to enter the defense vehicles business.           

SML Isuzu Market Share Trends

SML Isuzu gained around half a percentage point of market share in Apr-Nov 2016 over CY 2015, possibly due to improvement in cargo vehicles sales. It hopes to increase its market share through increase in the sales of school buses as new schools get set up away from the city centers, and also through sales of buses for corporate and individual tours.  

Other OEMs Market Share Trends

The remaining OEMs are small enough to be discussed together. Piaggio specializes in three wheelers where it is the second largest player. It plays in the commercial vehicles space with it Porter brand of LCVs. As can be seen from the graphics, its market share was miniscule in CY15, and decreased by about half in the Apr-Nov 2016 period. Similarly, Maruti Suzuki entered the LCV sub-segment in 2016, but has a negligible market share as of now in the commercial vehicles segment. AMW Motors was a significant player in some categories of trucks in the past, reaching a high of 10,000 units in 2011-12, but fell upon hard times and was sold off to the Russian company Kamaz. It too has a negligible share of the commercial vehicles market in India, as can be seen from the graphics.

Summary            

To sum up:

•  Market leader Tata Motors faces stiff competition mainly from its established competitors, who are chipping away at its huge share of the market.
• M&M is the second biggest player in the commercial vehicles segment, and has taken the market leadership in the goods LCV segment away from Tata Motors, arguably due to timely and innovative product introductions spread across the entire category.
• Ashok Leyland, the third biggest player in the commercial vehicles segment, has been taking market share away from Tata Motors in the M&HCV sub-segment, due to gains from the growth of the tipper category, long-term contracts in the infrastructure space and expansion outside its turf of the Southern states.
•  Force Motors, whilst a considerably smaller player, has been eating away market share from Tata Motors in the passenger LCV sub-segment, although being unable to expand to the other sub-segments prevents its market share growth in the commercial vehicles segment.
• SML Isuzu and VECV (Eicher) are the dark horses in the fray, both having increased their market shares by about a quarter when the Apr-Nov 2016 period market share is compared to the CY 2015 market share.