Automotive Sector

Trucks Business Caselet

Submitted by:
Team Name: 4Eggs
Campus Name: IMT Ghaziabad
Pawan Lodhi | 2nd Year | 11DM-100 | pawanlodhi@imt.edu
Rahul Gupta | 2nd Year | 11DM-117 | rahulgupta@imt.edu
Ravi Dhingra | 2nd Year | 11DM-122 | ravidhingra@imt.edu
Sumit Bansal | 2nd Year | 11DM-163 | sumitbansal@imt.edu

Caselet - Brief

Project Description
Break the status quo in the truck industry by innovating disruptively

Objectives
Understanding contemporary Commercial Vehicle (CV) & Domestic Freight Industry
Identifying the need gap and proposing the solution to bridge the gap
Understanding the sales challenge and convincing the customer for actual sales

Deliverables
Strategy to increase market share in CV sector by capturing key customer insights

Flow of Content
Indian CV Industry, Positioning and Perception

Value Chain Analysis

Customer Segmentation

Product Perception

Key Buyer Insights

Key Non-Buyer Insights

Major Issues

Recommendations

Indian CV Industry
Oligopolistic nature
Top 3 players Tata Motors [60%], Mahindra & Mahindra [18%], Ashok Leyland [10%]
Segmentation on the basis of GVW LCV, MHCV

Players in MHCV Tata Motors, Ashok Leyland,

Eicher Motors, Swaraj Mazda, Asia Motor
Works Limited, Mercedes-Benz, Tatra and
Volvo, MNAL

Players in LCV Tata Motors, M&M, Ashok Leyland, Piaggio

Vehicles Pvt Ltd, Force Motors, Swaraj Mazda,
Eicher Motors and Hindustan Motors

End users of CV Industry

Small Fleet Owner [SFO] Owns 1 to 5 trucks
Medium Fleet Owner [MFO] 6 to 20 trucks owner
Large Fleet Owner [LFO] > 20 trucks owner
MHCV Growth of 8.8% during 2011-12
Domestic MHCV good segment 299,309 units
Further classified into ICV, MCV, MAV, Tipper & Tractor Trailers

* CRISIL Research

MNAL Positioning
Two factors dominates
Factor 1 (Price, Mileage &
Cabin Comfort)
Factor 2 (Speed, Power &
Torque)

Price
Mileage
Cabin Comfort
Speed
Power
Torque

Mahindra Navistar

1
Factor 2 [Speed, Power, Torque]

Consumer Perception about

Mahindra Navistar on various
factors

Positioning

1.05

0.95

Ashok Leyland
Bharat Benz *

0.9
0.85
0.8

Tata

Eicher

0.75
0.7
0.7

0.75

0.8

0.85

0.9

Factor 1 [Price, Mileage, Comfort]

* Above data corresponds to 40 tons trucks except 31 ton taken for Bharat Benz

0.95

Perception about Players

Price

Aesthetics

Maintenance

Mahindra Navistar
Tata Motors
Ashok Leyland

Resale Value

Mileage

Service Cost

Domestic Freight Transport Industry

Value Chain
Ensures supply of
trucks for a
commission
Transport Operator

Brokers

They solicit freight, collect and

forward/distribute goods. They may own
their fleet but rely largely in truck
operators for transportation
Transport
companies/
contractors/boo
king agents

Consigners/users

Industry Trend
As per Crisil Research role of brokers will reduce significantly over the next 5 years as the
industry
With growing awareness and easy telecommunication facilities in place, transport operators
are directly contacting the transport companies and (sometimes) the consignors too.

Domestic Freight Transport Industry

Customer Segments (1/2)
Make 90% of
the market

Small Fleet Operators

Significant dependence upon
brokers.
Haulage: last mile and short haul
routes not exceeding 15-200km.
Mostly operate in full truck load.
Mostly attached to Large Fleet
Operators.

Large Fleet Operators

Haulage: long haul on hub and
spoke distribution model, Multi
regional or pan India network
Operation in both fully loaded
and partly loaded business
Bid directly from consigners
without intermediary support.

SFO play a major role in the market as most of LFOs and companies/consigners tie up
with them to complete their requirements on spot basis.

Domestic Freight Transport Industry

Customer Segments (2/2)
Uncontrollable external
factors

SFO/MFO typical profile

Believe in traditional way of
doing business
Low risk appetite
Dont consider driver as an
important stakeholder

Traffic Jams and bad

Based upon the fact that
roads
drivers keep on changing their
Overloading
job and perception that they
Challan or fine
do not provide authentic
Police or bribe issues
feedback

Revenue Models Followed

Fixed charges given to drivers

Advantage of
mileage is passed
onto drivers instead
of owners

Model generally
used in fixed routes

Variable charges given to drivers

Track of everything
is maintained,
amount reimbursed
on actual slips

Chances of diesel
theft , model is
generally used for
flexible routes

MNAL Product Perception & Key Insights

Positive Perception
Better than TATA in
performance
Better engine
10-15% more comfort
while driving
Better mileage

Negative Perception

Insights

Bas suna hi hai truck ke

baare mein dekha nai
kabhi
AC wala truck hai mehnga
hoga
Bina cabin ke nahin aata
Mahindra ka truck
Aise truck to bas London
Paris mein hi chal sakte
hain
Demo to nai dekha
Dikhne mein acha hai

People have not seen

Mahindras Truck much on
road
In Sahibabad industrial
area only 3-4 people have
Mahindras trucks
People Think that Truck
comes with only AC and
Built in cabin
People have perception
that such a truck is not
suited to Indian conditions
Mahindra s truck has
good aesthetic appeal

Key Points:
Product offerings have not been communicated properly therefore potential customers have
misconceptions
Demo of trucks has not been given at potentially beneficial strategic locations such as
Sahibabad area

Domestic Freight Transport Industry

Key Customer Insights Buyers (1/2)
Voice of Customer

Buying
Parameters

Aarzoo Transport, Sahibabad Area

Cost

Humne isliye liya tha kyunki 3 lac discount mil

rha tha shuru ein 2 truck par

Customer is money minded

and price sensitive

Mileage

Average to behtar hai aur 1 saal jyda bhi

kheench leta hai par kharcha jyada hai ghoom
phir kar baat barabar hi pad jai hai

Advantage of mileage nullified

due to high maintainance cost

Maintenance

Spare part nahi milte market mein

Lack of spare parts in local

markets is a hindrance

Service

Baut dikkat hai siraspur jana padta hai, time

kharab hota hai, raaste mein problem aati hai,
hmare yahan time ki kimat hoti hai agar ek din
truck nahi chala to main to free mein Rs. 2K ki
EMI aur RS. 300 driver ko de rha hoon

Lack of availability of service

centers at right location

Resale Value

Lagta hai 2 saal jyada chal jaega, bhari hai

machine, lekin dekhte hain ki market mein kya
milta hai

Product is robust but

apprehensive regarding
future

Insights

(Fleet of 8 MNAL Trucks)

Domestic Freight Transport Industry

Key Customer Insights Buyers (2/2)
Existing customer facing issues to realize potential benefits due to high maintenance
cost . For e.g. this customer:
Had to shed Rs.2.5 Lac to get a small issue in cabin get repaired where as new
wood cabin comes at Rs.1.5 Lac
Is not using GPS facility as Airtel SIM is seen as unnecessary expense
Follows fixed revenue model, advantage of mileage passed on to driver instead of
owner

Domestic Freight Transport Industry

Key Customer Insights Non Buyers (1/2)
Voice of Customer

Buying
Parameters

Calcutta Road Transport, Sahibabad Area

Cost

bahut important hai, lekin spare part bhi zaruri

hai,Eicher lia kyunki wo sasta de rae the

Potential customer is also

money minded and price
sensitive

Mileage

Overloading se average ka fayda khatam ho

jata hai, diesel ki chori bhi hoti hai jiska aap pta
nai lga sakte , avg. kitna acha ho jae police wale
aur traffic ka kuch nai kar sakte

Advantage of mileage nullified

due to uncontrollable external
factors such as diesel theft

Maintenance

Spare part araam se milne chaiye, baki sabke

asaani se mil jate hain, hum samajhte hain ab
mahindra nya hai to time lagega uske spare ane
mein

Customer understand that

spare parts will not be that
easily available

Service

Local mechanic se hi theek krate hain, bolti

sab company hai sevice dengi on call, deti koi
nai hai aur hum itne pade likhe nai hai ki
kaagzi kaam kar paein

Lack of faith in companies

from point of view of
providing service

Resale Value

Abi Market nahi hai Mahindra ki

Customer understand that

resale value is not good

Insights

(Own 70 Trucks)

Domestic Freight Transport Industry

Key Customer Insights Non Buyers (2/2)

New potential customer is intelligent and lack trust that spare parts will be
available and required service will be provided

Understands that there are some uncontrollable external factors

Key Insights MNAL Dealer Outlet

Buying
Parameters

MNAL Dealer Outlet

Indraprastha Automobiles, Siraspur Area,
Delhi

Moment of Truth

Our price is high because of our high quality

product, though we give discounts in bulk deals

Though shows as premium but

most of selling happens in
bulk to LFO at discount rates

Mileage

Minimum 0.5% better than nearest rival

Advantage of mileage nullified

due to uncontrollable external
factors such as fine, Jam etc.
or faulty business models

Maintenance

Agreed that spare parts are not available in the

market

Not able to make spare parts

available in the market is an
issue

Service

1500 service centers for 24*7 service, 48 hr

service guarantee else Rs. 1000 penalty

Resale Value

Resale value is less, Mahindras brand name is

not established in truck industry

Cost

Target
Customer

Emphasis on targeting Large Fleet Owner (LFO)

Reliable service facility is

there but Rs 1000 penalty not
sufficient for lost time and
revenue
SFOs which makes around
74% market are unattended

Major Issues
Gap between sales strategy and vision of making a dent
in the market, not targeting SFO, 74% of total market
Existing customers not able to realize the promised
operational economics benefits
Not able to communicate benefits and build trust
among potential customers that MNAL will be able to
keep its promises

Recommendations

Strategy is devised to instill faith in delivery of promises:

Empowering existing customer
Mahindra Assistance
Mahindra Authorized Service Point

Touch base with new customer segment

Mahindra Vishwaas
Mahindra Advantage

Recommendations
Mahindra Assistance

Mahindra Fleet Owner - Route fix hai to hum driver ko lum-sum paisa de dete
hain, sab kuch usko usi mein manage karna hota hai
Philosophy
Helping the customers change the way they account operational expenses

Existing Practice
- Lum-sum amount is allocated to the
transport route

Proposed Practice

- Breakdown the direct and indirect

- Even if the vehicle is efficient, gain is not variable cost of each journey
realized by the owner
- Each to be reimbursed or paid as per the
defined rule or at actuals
- The customers are not confident and are
reluctant to use such systems themselves
- MNAL to help and assist them to
familiarize with these system and
incorporate in their day to day business

Fuel Charges are 50% of total cost of transport operator Crisil Research

Recommendations
Mahindra Authorized Service Point
Mahindra Fleet Owner - service ke liye siraspur jana padta hai
Philosophy
Maintenance and Repair a critical buying consideration

Framework
- Choosing a service point at a strategic location, possibly near existing fleet
owners
- Transferring knowledge and technical know-how of the truck
- Certifying them as Mahindra Authorized Service Point
- Strengthening the belief of existing customers on delivering what is promised,
reducing downtime
- Engaging prospects on one of the crucial buying factor
- Increasing presence of the Mahindra as a brand, spreading word-of-mouth

Recommendations
Mahindra Vishwaas

Mahindra Fleet Owner - product chal gaya to resale ayega..tata ke agar 9 bhi
milenge aur mahindra ke 6 mile to humara 3 lakh ka discount baraabar ho jayega.
Philosophy
Building the trust in the market for the resale value, another critical buying factor

Objectives
- Existing Customers Forging the belief that vehicle does have a good resale
value
- Touching New Segment Selling refurbished trucks to customer with low
purchasing power
- Increased Volume Mahindra leverages the potential by tapping demand in
both the segments

Recommendations
Mahindra Advantage
Mahindra Fleet Owner - 3 lakh ka discount diya tha isliye khareed liya.
Philosophy
Maintaining the price premium, earning on spares and overcoming the shortage of
Point of Purchase for spare parts

Framework
- Leaving discount model behind Mahindra can bundle the common spare
parts equivalent to the discount offered along with the purchase of the vehicle
- Win- Win situation
Mahindra is able to sell more spare parts at a bundled rate, yet maintains a
premium positioning
Making customer aware of advantages of using genuine spare parts in
practice
Customer is satisfied as it gets him more value for money and pacified against
the foreseeable risk of non-availability of spares in the neighborhood