Maruti Set to Challenge Tata’s Dominance With Small TruckSiddharth Philip
Maruti Suzuki India Ltd., the nation’s biggest carmaker by volume, plans to start selling small trucks to challenge Tata Motors Ltd.’s dominance in a segment that has shrunk in demand for two years. Maruti’s shares rose.
The local unit of Suzuki Motor Corp. will introduce in the next four months vehicles with a payload of about one ton and sell them through separate showrooms, Chairman R.C. Bhargava said in an interview in New Delhi on Wednesday. The vehicles, to be initially sold in big cities, will come with gasoline, diesel and natural gas engine options, he said.
“We will start slow as it’s a totally new ball game for not just our dealers but also our own people,” Bhargava said. “We are focusing on our vehicles being reliable and economical as those are the most important factors for a customer.”
Maruti will be competing with Tata, which has about 84 percent of the market for trucks with a capacity to carry two tons or less. Commercial vehicle sales are poised to turn around after two years of decline as freight rates improve and the economy rebounds, according to a report this month by ICRA Ltd., the local unit of Moody’s Investors Service.
Shares of Maruti rose as much as 1.7 percent in Mumbai trading. They were trading at 3,708.45 rupees, up 1.4 percent, as of 10:50 a.m.
“Maruti will get an additional source of revenue by entering into the CV space,” said Bharat Gianani, an analyst at Angel Broking in Mumbai. “It won’t be easy but if they have a competent product they can do well, given that Suzuki’s pickups are fairly well received in other markets.”
Light commercial vehicle sales will pick up as the hub-and-spoke logistics model gains prominence, and demand is expected to increase at an 11 percent to 13 percent compound annual rate over the longer-term, the ICRA report said.
Sales of vehicles in the segment declined 21 percent to 120,220 units in the eleven months ended February, as delinquencies on loans increased amid weak demand. Mahindra & Mahindra Ltd. had a 12 percent share of the segment, according to data from the Society of Indian Automobile Manufacturers.