Mahindra Navistar eyes full capacity in 3-4 years

The Indo-US joint venture recently rolled out its 5,000th truck and aims to begin exports even as it draws up a strategy to be a ‘strong No. 3’ player in India.

It was January 4, 2010 when Mahindra Navistar unveiled its 25-tonner and 40-tonner trucks that spearheaded its entry into the country’s medium and heavy commercial vehicle (M&HCV) market. Last month, it crossed the 5,000 mark, 4,500 of its trucks already plying on the road.

“It took longer than expected,” says Nalin Mehta, managing director. Breaking into a domain virtually ruled by only two OEMs is not that easy irrespective of the quality standards, says Mehta. As per Society of Indian Automobile Manufacturers (SIAM) data, the two biggies – Tata and Leyland - cornered 83 percent of the M&HCV market (trucks) in 2011-12. However, the relatively new player is gaining acceptance of late. “Among the top 100 transporters, every third one is an MNAL customer. And out of that, every third customer has placed a repeat order which is thrice the earlier one,” reveals Mehta.

A confident Mehta feels MNAL has reached a 3.4 percent mark in market share and a “tipping point” for growth. The current fiscal, 2012-13, will see the company launch multiple products in the 16-, 25- and 31-tonne segments. “This will be a defining year,” says Mehta. Apart from the M&HCVs, fully-built ambulances, mobile medical units and a new range of buses are lined up for launch in the light CV space this year.

Mehta admits that even as it gets top honour in customer satisfaction, MNAL is lagging behind in visibility. The plan to expand its dealership network from 56 outlets to 80 by March 2013 and 1,800 service points across the country should help address that issue to some extent. The incentive of a four-year unlimited mileage warranty is aimed at increasing the customer base and thereby the visibility of Mahindra Navistar vehicles on road.

In the Indian market, custom-built solutions are a key connect with customers. Which is why MNAL has launched the cowl version to attract customers who do not want to pay for the factory built cabin. Interestingly, MNAL says some of these customers have changed their minds after seeing the cabin version. The company has also launched a 170 hp engine for transporters who do not want to invest in its more powerful and expensive options.

South African safari

The Mahindra-Navistar joint venture was set up with as an export hub as well. South Africa, where M&M already has a presence with its tractor and utility vehicle businesses, is set to be MNAL’s first major export market. The company has started testing vehicles in that market.

With aggressive expansion plans for both domestic and overseas markets, MNAL hopes to hit peak annual production capacity of 50,000 units in three to four years.

INTERVIEW WITH NALIN MEHTA, MANAGING DIRECTOR — MAHINDRA NAVISTAR AUTOMOTIVES



What were the challenges faced in reaching the 5,000th truck mark?

They say the first million is the most difficult! We have taken more time to gain the confidence of the customer. The customer is an overcautious kind of person.

Along the way, we got to know what kind of variants he wanted. The cowl version and the 170 hp variant are such examples.

The customer has a lot of faith in the Mahindra brand. It’s the confidence that takes time to build. Now that we have 5,000 trucks around, the tipping point has arrived. You saw the TNS customer satisfaction score, where we are number one. You saw the repeat orders. The repeat order is three times of the first order. Therefore, I feel the tipping point is around.

Some trucks from global OEMs are seen as having power, or features, which are more than what is required, or what the market is ready to pay for. What do you have to say about this?

There is a certain section of people whose business model is such that their utilisation is not for very heavy loads or they ply on short routes. Again, the cowl is something that is like a tradition in the country, and many do not want the cabin.

After we introduced the cowl, sales of cabin versions have increased because customers have started coming to our showrooms. Earlier, they were not interested to come to the showroom since there was no cowl version. Now, we actually have cases where a customer came to see the cowl but bought the cabin version.

You say 2012-13 will be a defining year for MNAL. Between LCVs and M&HCVs, where will the action be?

In LCVs, MNAL is a very strong player in the south. Its all-India market share is 12 percent, of which 60 to 70 percent of the sales is in the South.

We have huge potential to build up our market in the North, West and East. That’s the area where we will work in LCVs this year. In HCVs, we have to just grow.

South Africa is on your radar for exports. What about other Navistar markets?

India is the only place where Navistar has a full-forward cabin. Wherever there is a market for this kind of a cabin, Navistar will look at India to source it. There are possibilities like Brazil where we could look at exporting cabins.

SUMANTRA BAROOAH