Despite heavy demand for medium and heavy commercial vehicles (M&HCV), the manufacturers are aggressively offering discounts on them in one form or the other, claims Mahindra & Mahindra (M&M). Although, it has gone down marginally in past couple of months.
Talking about the discounting spree, Vinod Sahay, CEO, Mahindra Truck and Bus Division (MTBD), said that there is not a single player in the industry which is not into giving of discounts in one form or the other.
This is happening when the industry is witnessing more demand than the supply, Sahay adds. “So now, the discounts are built up in the commercial vehicles’ (CV) price although it has come down in the last couple of months,” said Sahay on the sidelines of an announcement regarding enhanced warranty and some other cost-saving measures for its popular selling vehicle Mahindra Blazo.
At a time when CV industry is witnessing one of the fastest growth in the recent years, the original equipment manufacturers have not shied away from blaming each other for getting into the ‘discount war’, which is pulling down the margins, experts claim.
The growth in sales is backed mainly by increase in infrastructure spending, replacement of fleet to BS-IV from BS-III, restrictions on overloading, growth in construction, fresh tenders in car carriers, coal movement, and petroleum sector, etc. Increasing demand from logistics, e-commerce and fast-moving consumer goods sectors have also bolstered growth.
Interestingly, M&M management during an investor update briefing predicted that if M&HCV the segment continues to see similar growth for next two-three quarters, then the discounts may come down.
The industry experts claim that the sudden increase in demand for commercial vehicles in the past few months took even the OEMs by surprise. This lead to a shortage in inventories, and therefore, delays in deliveries.
SCALING UP
- Most of the OEMs have now increased production, shifts
- However, vendors are taking time to scale up their output
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