M&M lines up Rs 500 crore investment to turnaround M&HCV business

Mumbai, August 14, 2013: Following its buyout earlier this year of Navistar’s equity in its truck-making joint venture with the American company, Mahindra & Mahindra (M&M) has reaffirmed its commitment to turnaround its medium and heavy commercial vehicle (M&HCV) business. As of March 31, 2013, the business had recorded a loss of Rs 920 crore and in the coming months this loss will grow higher due to the continued investment and lacklustre sales in the market due to the current downturn.

M&M has renamed the erstwhile Mahindra Navistar Automotive Ltd as Mahindra Trucks and Buses Ltd (MTBL). Subject to regulatory approvals, the company also intends to demerge its trucks and buses operations from MTBL into Mahindra & Mahindra to derive greater synergies. It also plans to invest Rs 200 crore to further strengthen its existing product line-up and start exploratory work for new product lines that could lead to further capital infusion of over Rs 300 crore in due course. MTBL has also announced new branding for its heavy commercial vehicle range. The multi-axle trucks will now be called Mahindra Truxo 25 and Truxo 31; tractor trailers as Traco 35 and Traco 40; and the tippers as Torro 25 and Torro 31.

Speaking on this new development, Dr Pawan Goenka, president - Automotive & Farm Equipment Sectors, M&M, said, “We are fully committed to our commercial vehicles business and intend to focus on running the LCV, truck and bus business as a separate division after the proposed demerger, with the objective of growing our presence in the Indian CV industry. We plan to invest significant resources over the next few years which will help us strengthen our existing product range and refurbish the current LCV range. Exploratory work has also begun for the introduction of new products that will help address the ICV and MCV segments in the 7.5- to 16-tonne GVW category.”

Nalin Mehta, managing director and CEO, MTBL, said: “The new nomenclature and rebranding demonstrates our long-term commitment to the commercial vehicle business which has the full support of the Mahindra Group. With a powerful range of products including HCVs, LCVs and buses, and a continued focus on breakthrough innovations we will continue to deliver market-leading performance and enhanced products and services for the Indian transport industry.”

MTBL will leverage the Mahindra Group network comprising 270 authorised service points, 57 3S dealerships and 1,263 roadside assistance points. The truckmaker has also launched new initiatives like a 5-year or 500,000 kilometres warranty, which is transferrable and an industry first. For tippers, the company has launched on-site warranty and an attractive AMC package. There is also an offer of up to 100 percent finance on chassis and up to 5-year loan tenure.

Photograph: Dr Pawan Goenka, President, Automotive and Farm Equipment Sectors, Mahindra & Mahindra.