Manufacturers in the nine-tonne gross vehicle weight (GVW)/six-tonne payload (PL) segment in the light commercial vehicle (LCV) market are looking at the new financial year as the battleground in which the main opponent is the industry's heavyweight Telco.The commercial vehicles giant's move to introduce its new 909 model with a price tag that is a whopping Rs 60,000 cheaper than the competition has clearly drawn the battle lines.
Eicher's 10.90, Ashok Leyland's Cargo 909 and the Swaraj Mazda Super, the other three major products in the segment are all priced at around Rs 5.4 lakh on the roads.
Telco, which introduced the 909 late last year, has however priced the model at Rs 4.8 lakh -- over 11 per cent cheaper than the competition.Industry sources argue that the Telco 909 is only an upgrade of the 709. It is also a rather late entrant.
"Its payload is only 5.5 tonnes and packs lower power than competing products," industry sources said. Nevertheless, they do concede that they are uneasy with a newproduct that is offered way below established price points.
"Besides the price advantage, Telco has tremendous clout with its cheap finance schemes," sources conceded. Despite a two percentage point hike in interest rates by Tata Finance, Telco models are still available at rates cheaper than the market. "The fight will be with Telco," sources said. And that just about sums up the outlook for the current financial year.
But why all the focus on the six-tonne payload segment ? Here are the reasons:
This is one of the few segments in the commercial vehicles (CV) industry where Telco does not enjoy a brute majority. Figuratively speaking, this is Telco's `soft belly'. Above this is the HCV range where Telco has a 68 per cent marketshare. Below this, the 207 and 407 segments too are dominated by Telco.
The six-tonne payload segment is also the largest bread-winnerfor others, including Eicher and Swaraj Mazda.
They will, therefore, be extremely keen to ward off any threat to a shrinking piefrom Telco.
Though overall volumes are falling at the moment, the six-tonne payload segment is probably the most attractive for all.
Only a few years after their entry into the market, the six-tonne payload range of light commercial vehicles (LCVs) is now set to complete the cannibalisation of the 3.5-tonne payload LCV range. This shift can be attributed to a price difference of only Rs 35,000 between the two segments. Also an earlier excise difference between the two segments was taken away recently.And industry sources expect the balance to tilt further in the favour of the six-tonne payload segment during the current year as well.
"The total market size of both the segments put together is about 20,000 vehicles. From a zero per cent share a few years ago, the share of the six-tonne payload range has increased to about 65 per cent," a source from Eicher Motors said.
"The lower payload range will however not be wiped out completely. A small market will continue to exist," he added.
"Thesix-tonne payload segment is where the money is. All LCV manufacturers are expected to focus in this segment during the current year," sources said. The case study of Ashok Leyland illustrates why.
Leyland introduced the Cargo 709 and 909 almost simultaneously. The fall in the sales of the 909 has been minimal. However, the 709 has been hit hard. Ashok Leyland has tried everything possible. It has stripped the cabin from the 709 and offered it about Rs 35,000 cheaper. It has redesigned the model and offered it as a 759. Still the action is with the Cargo 909.
Swaraj Mazda has been offering rather steep discounts, Ashok Leyland has its cheap finance schemes and Eicher too is feeling the pressure. The performance of these players during the year may well decide the long term prospects of all others in the six tonne payload segment.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
