M&M invests Rs 900 cr in new Urban Prosper Platform for LCVs

Automobile major Mahindra & Mahindra on Monday launched the new multi-energy commercial vehicle platform--Urban Prosper Platform--for its light commercial vehicles. The multi-energy CV platform will manufacture diesel, CNG and electric LCVs. Through the platform, the company has rolled out its first LCV—Veero—in the 2-3.5 tonne category with diesel and CNG variant.

The company has made an investment of Rs 900 crore in the platform, Veejay Nakra, President-Automotive Division, Mahindra & Mahindra Ltd, told Business Today. "The total investment has been Rs 900 crores. As we will add the remaining variants and electric, they are only incremental over the Rs 900 crores," said Nakra.

In the 2-3.5 tonne category, Mahindra accounts for 63.1% of the of the market share, and in the less than 2 tonne category, Mahindra's market share is 51%. Of the total LCV sales, large pickup vehicles account for 85% of Mahindra's sales, whereas small pickup vehicles account for 35%.

Notably, the small commercial vehicle segment, which witnessed its peak in FY19, has been struggling for revival due to a decline in rural demand. According to Nakra, the less than 2 tonne LCV category has witnessed a degrowth of 8-9%. "Overall, >2.5 tonne category is about five lakh units. The 2-3.5 tonne segment, which is a larger segment, accounts for 3.3 lakh units. The >2 tonne category has been declining in the last two to three years, but the 2-3.5 tonne category has witnessed a significant growth in the last two years," said Nakra. For Mahindra, approximately 53-54% sales happen in rural market, said Nakra.

Highlighting the reasons behind a stagnant growth in the less than 2 tonne segment, Nakra observes that the LCV segment is highly dependent on the rural market and the infrastructure spendings. "There are a number of reasons why, so far, the category has been kind of stagnant, and that's largely because this category is highly dependent on the rural market and on infrastructure spendings.  We had elections, then budget, and the heatwaves. At that time, people were waiting to know whether the monsoon was going to be a normal or not. So a lot of that had caused the industry to be flat or marginally negative, year-to-date," noted Nakra.

Nakra is, however, positive for the revival of less than 2 tonne LCV segment with an increase in rural demand.