Mahindra & Mahindra expects its small commercial vehicle business to maintain double-digit growth in the second half of the financial year, supported by an ongoing replacement cycle and demand from rural, infrastructure and urban logistics customers.
The automaker will look to sustain its growth momentum by operationalising additional capacity shortly, taking its small commercial vehicle output to 36,000 units a month to meet rising demand.
The industry has recently been growing by 20-30%, with Mahindra expanding at a similar pace, Nalinikanth Gollagunta, CEO, Automotive Division, Mahindra & Mahindra, told Autocar Professional.
“Overall sentiment is positive. We think there will be a strong festive season for the industry,” Gollagunta said. “The industry has been doing anywhere between 20% and 30% growth as a whole. We have been doing in a similar range as well.”
Replacement Cycle Fuels Demand for Small Commercial Vehicles
The demand upturn follows a prolonged period during which operators deferred vehicle replacements.
“For the last two and a half years, we kept saying that the replacement cycle was coming, and we were wrong for two years,” Gollagunta said. “The market was largely flat for almost one and a half years. But over the last 12 months, we have seen that play out.”
Mahindra has not seen signs of the cycle slowing, although the impact of a higher base is expected to become clearer after the third quarter.
“My sense is that once we finish the third quarter, we might want to see what the base effect is,” he said. “But we don’t see that being as big a concern, at least for the next few quarters.”
Capacity Being Readied
Gollagunta said supplier capacity, rather than any weakness in demand, had affected vehicle availability.
“The replacement cycle is on right now. Everybody wants to replace,” he said. “Whoever gives the vehicle first gets the customer.”
The company has operationalised monthly capacity of about 3,000-3,500 units for the Veero platform. The installed capacity can support production of up to 5,000 units a month, giving Mahindra room to increase output as the portfolio expands.
Wider Demand Base
Agriculture remains an important source of small CV demand, but infrastructure activity and the expansion of e-commerce, quick commerce, FMCG distribution and intra-city logistics are reducing the market’s dependence on a single customer category.
“When sentiment on the farm or agriculture side goes down, infrastructure comes in,” Gollagunta said. “In certain segments, we are seeing infrastructure buying more vehicles.”
He said rural sentiment remained positive.
“The categories are now at a mature stage where, if something goes down, something else comes in,” he said. “We have not seen any indication that rural demand is going down.”
Mahindra estimates the small pickup market below two tonnes at about 15,000 vehicles a month. Its share of the category stood at around 49% at the end of the previous financial year, an increase of six to seven percentage points, according to Gollagunta.
The company has about 52% of the wider commercial vehicle market below 3.5 tonnes, supported by its strong position in larger pickups. It holds a share of around 63-64% in the larger pickup category.
Veero Expands Addressable Market
Mahindra has sold about 42,000 Veeros since the model was introduced in September 2024. The vehicle is based on its Urban Prosper Platform, which can accommodate different payloads, cargo decks and powertrains.
The latest addition is the Veero 1.1 XXL CNG, with a payload of 1.1 tonnes and a 2,900mm cargo deck. The model is aimed at FMCG and pharmaceutical distribution, e-commerce deliveries, parcel movement and the transportation of fruits and vegetables.
Gollagunta said geopolitical developments and disruptions to energy supplies remained potential risks. However, the company does not currently see signs of a slowdown in domestic demand.
“The segment has come to a point where there is significant uptake from various applications,” he said. “It is directly connected to GDP growth, and GDP growth has been quite healthy. We are quite optimistic at this point.”