Category Archives: globalization

Data Shows Decline In Indian Mini-Truck Market

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The Tata Ace mini-truck

The Tata Ace mini-truck is the leader in the Indian mini-truck market.

Data from the Society of Indian Automobile Manufacturers shows that the mini-truck market is declining as larger pickup trucks are displacing them. Last year’s figures have pickups outselling mini-trucks 140,000 vehicles to 131,000. Estimates for this year put the pickup market at nearly 200,000. Increased urbanization and improving road conditions are driving the pickup trend according to industry executives. The pickup trucks can carry more cargo and have more horsepower than mini-trucks whose sales declined last year by 21% from nearly 167,000 units the year before.  Learn more:  Business-standard.com

Comment:  The decline in the mini-truck market would appear to be a problem for the Polaris-Eicher joint venture which just launched their Multix vehicle. However, the Multix is being positioned as a multi-purpose vehicle that users can easily transition from using for work to using for family purposes to even using for power generation, since the vehicle also has a generator that can be used for operating tools or provide electricity to the home. A primary target for the Multix is the rural and semi-urban independent business person. In contrast, urbanization is cited as one reason for the decline in the mini-truck market. It would be interesting to see the breakdown of where mini-truck sales have been declining, in terms of urban versus rural.

Polaris India Expects Strong Revenue Growth In India

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Executives at Polaris’ subsidiary in India, Polaris India, expect strong revenue growth over the next three to five years. By 2020 they are targeting a 100% to 200% sales increase at the subsidiary which sells ATVs, UTVs and motorcycles. The long term strategy is to build up enough volume to justify investment in local assembly plants. This would be the plan for motorcycles and off-road vehicles. Currently Polaris India imports all the Polaris vehicles they sell including the complete line of Indian motorcycles.

The management reports good sales of the Ranger EV in certain parts of the country and is exploring adding the GEM line of vehicles to their offering. Off-road vehicle sales are helped by the 39 Polaris Experience Zones, which are off-road vehicle tracks. They have also made sales to the Indian army and police. Polaris India distributes products through 16 dealerships in India and two more in Nepal and Kazakhstan. Export sales are made to Nepal, Bangladesh, Bhutan, Sri Lanka, Kazakhstan and Pakistan. Unrelated to Polaris Inida is the Polaris joint venture with Eicher. Learn more:  Timesofindia.com

Comment:  Of course, having sales targets and meeting them are two different things, but Polaris has consistently hit most of their long term strategic goals across many products. A lot will depend on how well the Indian economy grows but even slower growth in such a large market offers great potential.

Polaris Reports Strong Quarterly Earnings For Q2 2015

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Beauty shot of the new Sportsman ACE from Polaris.

The Sportsman ACE from helped drive Polaris ORV sales in the 2nd quarter.

Last week Polaris reported record 2nd quarter sales of $1.124 billion. While the company missed Wall Street expectations, they continued to experience growth across product categories including ORVs and small vehicles. The main problems for the quarter stemmed from very high demand for their motorcycles and issues with a new paint system exacerbated by the greater than expected demand. The following is a summary of  key points related to ORVs and small vehicles.

  • The new Huntsville plant is on budget and on time for a Q2 2016 start
  • ORV revenue (UTVs and ATVs) increased 2% in the quarter driven by strong RZR sales globally but offset by reduced shipments to dealers to lower inventory levels
  • Year to date ORV revenue is up 6%
  • Management reports gaining North American market share in side-by-sides and ATVs
  • Side-by-side retail sales increased high single digits which slightly outpaced the industry
  • Full-size Rangers and the ACE showed strength while there was some weakness in value and entry offerings
  • Sales promotion pressures were strong in the 2nd quarter
  • Management reports continued strong competition in the ORV market with ongoing product innovations from competing brands.
  • Global Adjacent markets decreased 3% in the 2nd quarter but are up 2% year-to-date and up high single digits in constant currency measurement
  • North American work and transportation revenue grew high teens percent driven by expansion and success in direct national account business and the Ariens partnership but there was weakness in the BRUTUS Channel caused by distribution, transition and erosion.
  • GEM revenue increased driven by double-digit retail growth
  • European work and transportation decreased high teens percent due primarily to currency weakness and some softness in the European quadricycle industry, which  is flat year-to-date.
  • Second quarter defense sales increased low single digits primarily due to timing of orders but the outlook remains strong with increasing DAGOR and RZR and international demand.
  • In international sales Latin America and Asia Pacific sales were strong while EMEA revenue suffered from currency issues and a weak Russian market.
  • Polaris launched their multi-purpose vehicle the Multix in India. The partnership with Eicher will start with 30 dealers and build to 200 by 2020.
  • Revenue guidance for the year is narrowed but essentially unchanged.

Learn more:  Seekingalpha.com (earnings call transcript)

Comment:  While the the UTV market may not be growing as fast as previous years, it is still showing signs of strong growth and is outpacing the economy in general. This is despite weaknesses in oil and agriculture driven markets. Competition continues to remain at a high level as exhibited by elevated promotion levels, numerous product introductions and continued product innovation.

New Zealand Department of Conservation Switching To UTVs

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UTVs like the Honda Pioneer 500 will be replacing ATVs at New Zealand's DOC.

UTVs like the Honda Pioneer 500 will be replacing ATVs at New Zealand’s DOC.

The New Zealand Department of Conservation (DOC) announced that they will be phasing out their fleet of ATVs in favor of UTVs by year end. A key reason of the change is safety, as the organization reported 11 accidents last year on ATVs. The UTVs also can two people, travel across a wider range of terrain and more easily carry or tow gear. Management also likes that the vehicles drive like cars, have rollover protection, lower center of gravity and seat belts. The 200 ATVs the DOC currently has in its fleet will be replaced by 80 UTVs. One vehicle being considered is the Honda Pioneer 500, which is not much wider, 50 inches, than the existing ATVs. Learn more:  Stuff.co.nz

Comment:  The transition from ATVs to UTVs has been one of the drivers the past few years in the growing UTV market, although it has often been discussed in terms of older ATV riders looking for a more comfortable riding experience. The safety aspect is a different perspective but one that can be very important for commercial and institutional buyers. Given the numbers discussed in this situation, 200 down to 80, the cost savings could be significant as well depending on what types of ATVs and UTVs are involved.

Mahindra Launches Jeeto Mini-Truck

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The new Jeeto mini-truck from Mahindra & Mahindra.

The new Jeeto mini-truck from Mahindra & Mahindra.

Mahindra & Mahindra has launched their new commercial mini-truck, the Jeeto, targeting the sub one tonne load mini-truck segment. The Jeeto comes in eight different variations and will be available in S (S6-11, S6-16), L (L6-11, L6-16, L7-11, L7-16) & X (X7-11, X7-16) series, catering to mini-truck, micro-truck and 3 wheelers customers. The vehicles start at 2.32 Lakh or 3,620 USD. The variations include options for powertrains, payload capacity and deck lengths.

  • Powertrains – 8.2 kW (11 HP) and 11.9 Kw (16 HP)
  • Payloads – 600 Kgs and 700 Kgs
  • Deck lengths – 1630mm (5.5ft), 1780mm (6ft) and 1930 mm (6.5ft)

Jeeto also comes with a class-leading warranty of 2 years/40,000km (whichever is earlier). It will be available in 5 colors of Diamond White, Sunrise Red, Mango Yellow, Ultramarine Blue and Premium Beige. The vehicles are targeting the last mile distributor segment. Mahindra & Mahindra spent approximately $8 million US on product development and another $40 million US on the production facility. Learn more:  Indiatimes.com and Livemint.com

 

Eicher Polaris JV Launches Multix: A Personal Utility Vehicle for Indian Market

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The Multix utility vehicle, the first offering from the Eicher-Polaris joint venture.

The Multix utility vehicle, the first offering from the Eicher-Polaris joint venture.

Eicher Polaris Pvt. Ltd., a 50:50 joint venture between Eicher Motors Ltd and Polaris Industries Inc., launched the Multix India’s  first personal utility vehicle. The Multix, available in two versions and four colors, is targeting the “independent businessman”. The Multix is being positioned as a versatile vehicle that can be used for both business and family purposes. Management estimates the market size to be 60 million households. From initial idea to launch took Eicher and Polaris about five years and $60 million. Extensive consumer testing was performed to identify the market and test the concept. The Multix is being viewed as launching a new vehicle category. Initial production is expected to be 5,000 vehicles per month and the manufacturing facilities can expand to handle twice that volume.

Key features of the Multix include:

  • 500cc Diesel engine
  • Cabin space that can comfortably seat a family of five along with luggage
  • Multix can be adapted to create large storage space of 1918 liters.
  • X-PORT a unique power-take-off point, which can generate power of up to 3 KW that can be used for lighting homes and powering professional equipment
  • Pro Ride Independent suspension system
  • Ground clearance of 225mm,
  • Mileage of 28.45 kmpl.
  • Tubular frame structure and Roll-Over Protection System (ROPS) 
  • Flexituff body

The two Multix versions are priced at 3,620 USD or 2.32 Lakh and 4,245 USD or 2.72 Lakh. The vehicle will be launched in 30 cities with test drives starting in July and deliveries in August. Learn more: Equitybulls.com

Comment:  In contrast to the US market where a crossover utility vehicle means a vehicle for work and play, in the Indian market it means work and family use. This utility vehicle/mini-truck market is very dynamic. Not only do you have new entrants like Eicher-Polaris with the Multix, but there are also a number of startups receiving venture capital that are targeting the independent delivery/shipping market that utilize these vehicles. These companies are using software and other technology to make the process of locating and quickly accessing a shipper much more efficient. This could prove to be another catalyst for the vehicle market.

Sichuan China To Loosen Low-Speed Electric Vehicle Restrictions

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Reports from Sichuan China point to the government loosening restrictions on low-speed electric vehicles. The new regulations are expected in August for the province. Lead acid battery manufacturers that supply the market expect it to grow 15% in 2015. In related news, Shandong province, a major producing area of low speed EVs in China reports production of the vehicles is up almost 70% to 69,200 vehicles in the first quarter.  Learn more:  Metal.com

Comment:  When it comes to low speed vehicles the market size in China far outpaces the US. However a direct comparison is hard to make because low speed vehicles in China have a much higher top speed, about 48 mph. A more basic difference though is that there is simply more market demand. With comparatively low vehicle penetration, there is a sizable demand for vehicles that are more affordable than highway capable vehicles but can still get you around town locally.

Kubota To Invest $80 Million To Expand US UTV Manufacturing

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Utility vehicles like the Kubota RTV400Ci will be built in a new manufacturing facility starting in 2017.

Utility vehicles like the Kubota RTV400Ci will be built in a new manufacturing facility starting in 2017.

Kubota Tractor Corporation (KTC) and Kubota Manufacturing of America Corporation (KMA) announced plans to invest approximately $80 million in their Gainesville, GA manufacturing operations to increase production of utility vehicles, sub-compact tractors and turf products. The investment includes a new 502,000 square foot facility close to existing facilities for the production of RTV utility vehicles, as well as, upgrades to their existing facilities to enhance production for sub-compact tractors and turf products. The new facility will have the capacity to produce 50,000 utility vehicles per year. Construction is expected to begin in September 2015 and mass production in spring of 2017. Learn more:  Businesswire.com

Comment:  Kubota joins Polaris and Arctic Cat as the latest utility vehicle manufacturers to announce sizable investments in new and/or upgraded manufacturing facilities. This indicates that manufacturers are optimistic about the overall market in general and their products in particular. It also indicates that competition in the utility vehicle market will continue to be fierce and likely become more intense as these manufacturers will have to increase sales to generate returns on these sizable investments. SVR estimates that Kubota sells approximately 20-30 thousand UTVs a year in North America.

Startups Aggregating Mini-trucks In India’s Local Delivery Market

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Some of the mini-trucks and owner-operators part of the LOTrucks.com network.

Some of the mini-trucks and owner-operators part of the LOTrucks.com network.

LOTrucks.com, an Indian startup, is using technology to aggregate the highly fragmented local delivery market in the country. Major cities such as Bangalore employ a hub and spoke delivery system where the last mile is handled by mini-trucks and other vehicles driven by owner-operators. The problem has been connecting the large number of owner-operators with potential clients in an efficient and cost-effective manner. LOTrucks joins similar companies such as The Porter, Blowhorn and Shippr who are operating in Mumbai and Bangalore. LOT stands for Logistics, Optimization and Transportation.

According to the founders “When we noticed some important issues like large idle time of vehicles, no standard pricing, customer-driver communication gap and billing problems, we thought this can be addressed using technology.” LOT has reduced the time from order booking to processing to 30 minutes, implemented a standard mileage based pricing system to eliminate negotiating and trains drivers for communicating in the diverse city. An online payment system using a mobile is in the works. LOT currently has over 500 trucks including the LOT MINI, aTata Ace with 800kg capacity, and the LOT MAX , a Tata 407 with 2.5ton capacity. The founders plan to perfect their system in Bangalore before expanding to other cities.  Learn more: Yourstory.com

Golf Cars Finding Success In Thailand

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Local media reports that Global Electric Motorcars Asia and others are finding success in Thailand selling electric golf cars (not to be confused with Polaris’ GEM brand). Key market segments are resorts and hotels in the South and universities in the Northeast. The company has three showroom locations with service centers in the country, one in Bangkok and two more in the South with plans to open a third. Used primarily for people transport and golf, the majority of the vehicles in the market are imported. Cost-conscious shoppers tend towards Chinese imports that are exempt from the stiff 40-50% import tax other manufacturers pay. The company is also trying to get NEVs licensed for use on public roads to expand the market. Learn more:  Phuketgazette.net