Vehicle firms diversify product range; core markets hotting up

Vehicle firms diversify product range; core markets hotting up
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First Published: Wed, Mar 19 2008. 10 43 PM IST
Updated: Wed, Mar 19 2008. 10 43 PM IST
New Delhi: From armoured trucks for transporting cash and bullion, to fire extinguishing trucks for airports, the changing consumer landscape in India is opening up new business opportunities for commercial vehicle makers just as competition intensifies in their traditional product lines.
These vehicles, which were traditionally supplied by non-branded vendors because of low volumes, are increasingly lucrative because of the rapid expansion in sectors such as consumer banking and civil aviation.
Those truck makers who have attempted specialist work have primarily done it for the Armed Forces, supplying vehicles to the government after the defence sector was opened up to the private sector.
Consider Ashok Leyland Ltd, the country’s second largest truck and bus maker. It is now looking at producing fire tenders for airports, a growing segment that the company estimates to be worth Rs2,000 crore over the next three-four years. It puts the demand for fire tenders at about 500 vehicles, each costing Rs4 crore, during this period.
“Nobody’s doing this business at an organized level,” said B. Khaitan, special director for specialist vehicles at the company. “These vehicles are now mainly procured outside India. With the kind of growth seen in the civil aviation sector, we see a lot of opportunities here.”
And for good reason. India’s civil aviation sector is expected to grow 25% in terms of passengers every year over the next three years, according to Delhi-based consultancy Centre for Asia Pacific Aviation.
With airlines doubling their fleet size to about 350 planes since 2003, the state-owned Airports Authority of India is likely to complete upgrading 35 non-metro airports in the country in early 2010.
Meanwhile, the government has set itself a target of having 500 functional airports, including a good number of private airports, by 2020, up from the existing 82.
Rival Mahindra and Mahindra Ltd, the country’s largest utility vehicle maker, is looking at the banking industry for selling special vehicles. The company, which has already developed expertise in making armoured vehicles, recently unveiled a vehicle for transporting cash to automatic teller machines.
“People are using all types of vans to transport cash and bullion now,” said Khutub A. Hai, who heads Mahindra’s defence division.
“Sooner or later, the Reserve Bank of India will come out with guidelines for these and in the long run, there is going to be a great market for these vehicles,” he added.
Hai wouldn’t discuss market potential or the number of such trucks that his company expects to sell.
Banks in India, typically, outsource these services to security firms, which get their vehicles retrofitted with armoured plating from the so-called unorganized sector.
There are at least 20,000 ATMs in India, mostly in urban areas, according to BanknetIndia, which organizes banking industry conferences. This figure is expected to soar, especially in smaller cities and rural areas, as banks use that to expand their reach in a growing economy.
Not to be left behind is Tata Motors Ltd, the country’s largest maker of automobiles by revenues.
It is tying up with smaller companies to use its vehicles as ambulances and garbage tippers.
“They are sold as complete units by Tata Motors through its dealers,” said a Tata Motors spokesperson. “Thus, the operator gets finance, warranty on the complete vehicle, maintenance contract, just like that of a regular vehicle.”
Sanjiv Shankaran and Tarun Shukla contributed to this story.
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First Published: Wed, Mar 19 2008. 10 43 PM IST