A joint venture between Eicher Motors Ltd. of India and Volvo, VE Commercial Vehicle, may enter the growing small commercial vehicle market in India. The small commercial vehicle market consists of the vehicles of 5 tonnes or less. The joint venture is considering a mini-truck offering in the 1-3 tonne range. This segment already features vehicles like the Ashok Leyland Dost, Tata Ace and Mahindra’s Maxximo Plus. The decision to enter the market will be made within the next six months with a potential product launch in 2016-17.
The small commercial vehicle market represents over 50% of the commercial vehicle market with an estimated 359,000 vehicles sold every year and growth to over 500,000 expected by 2019. The market is driven by the hub and spoke distribution system in India where large trucks transfer goods to or between hubs and smaller vehicles deliver the goods the last few miles. Learn more: Economictimes.com
Comment: For regulatory reasons, mini-trucks have not been a major market in the US although farmers often purchase used mini-trucks coming out of Japan and use them as of-road work vehicles. In some areas they are being allowed more access to public roads, but this is often in the context of agricultural use rather than the general public. Eicher, which also makes motorcycles, has a joint venture with Polaris that started in 2012. This joint venture is focused more on a range of personal vehicles with reports of a four-wheeled vehicle to be launched in 2015. At the same time, there could be opportunities for the companies to work together in the small commercial vehicle space given Polaris’s acquisitions in the past few years of GEM, Aixam and Groupil.