Mahindra CE expects peak sales in FY27 after shift to BS-V; open to tie-up for green fuel tech – ET Auto

Mahindra CE division makes backhoe loaders in the earthmoving segment and motor graders in the road building machinery segment, in the Chakan, Pune, plant.

New Delhi: Mahindra Construction Equipment (MCE), a division of the Mahindra Group, expects that with the new BS-V (CEV/Trem) norms in the industry, the domestic market will slow down a bit in FY 2024-25, and will reach its previous peak of FY 2018-19 only by FY 2026-27.

“In the long term, we are very bullish about the construction equipment segment, owing to several infrastructure projects and other development activities. But whenever an emission norm change happens in any market, it pulls off the growth for about a year,” Jalaj Gupta, Business Head- Commercial Vehicles, Mahindra & Mahindra, told ETAuto.

“We will not be surprised if the market comes back to the levels of FY 2022-23 in the FY 2024-25. The challenge will be on account of the cost increase of the machines, with no commensurate increase in the per hour remuneration of the operators. We may also expect a lot of firming up of prices of the used machines in the next 1-2 years. The customer may also extend the life cycle of their machines than usual,” he added.

The BS-V (CEV/Trem) norms for the construction equipment industry will come into enforcement from April 1, 2024. At the EXCON 2023 in Bangalore, most CE companies displayed their readiness for new emission norms.

At the 5-day CE event held from Dec 12-16, the company launched the Blaxo X m-Dura in the Truck and Bus Division (MTBD) and the new BS-V range of construction equipments. It also demonstrated the LiftMaster compact crane – a new concept, with loading and hauling capacity.

“We are ready to launch our products in compliance with new emission norms across the range. Our testing and validation for BS-V is going on,” Gupta said.

Mahindra CE division makes backhoe loaders in the earthmoving category and motor graders in the road building machinery category, in the Chakan plant in Pune.

In the backhoe loader segment, JCB India dominates with about 80% share. While Mahindra CE is among the top 5 players, it constitutes a market share of just 2.2%. Other players in the segment include Caterpillar, Escort, CASE, etc. With a digging arm on the front and a loader on the back, these machines are mostly used in areas such as digging, excavating, and loading.

In the motor graders, MCE is the market leader with a share of 25.3%. These machines are used in maintaining road surfaces, grading, leveling, material removal, etc.

“Our estimates show the backhoe industry will grow by 15% to 20% year-on-year in 2023-24. We are looking forward to the BS-V migration as a big opportunity to challenge the market leader. Over the next 3-4 years, we anticipate the backhoe loader market to grow at a CAGR of about 4% to 5%,” Gupta said. He expects the motor grader segment to grow by about 20% -25%.

With an installed capacity of about 2,500 machines a year, MCE looks to expand only after 2-3 years. “By FY27, we would have also established our presence in the export market. So beyond that we will be actively looking at increasing our capacity.”

Currently MEC has a network of 52 dealers with 145 touchpoints. In the next three to four years, it aims to reach about 85 to 90 dealers across the country.

New export markets

With new norms coming in next year, India will be among the few countries in the world with such stringent emission norms. And that is going to make us even more capable of being an export hub for the world, Gupta said.

However, while the new BS-V norms will open an opportunity for the companies to enter the developed markets, they will also need to be compliant to the markets’ stringent safety norms.

Currently, exports constitute 25% to30% of MCE’s production in India. It exports to Kenya, Mozambi, Uganda and South Africa in the African continent; Saudi Arabia in the Middle East; and Nepal and Sri Lanka in Asia.

“As we go ahead, we are exploring markets like Tanzania and Jordan. Brazil, South America, is a market that we are actively looking at, where various testing and validation are underway. We should be able to begin exports to these markets by the next one or two years. In the long term, we want 1 out of every 3 machines to be exported.”

While all the MEC machines which are exported from India have an AC cabin, the ones sold in the domestic market offer it as an option.

Upcoming trends

Without sharing an expected quantum of cost increase from BS-IV to BS-V, Gupta said the products have also been improved with respect to technology and accessibility.

According to him, the industry will see two emerging trends in the next 1-2 years, including the use of telematics and alternative fuel technologies.

The Mahindra Group has a target to be carbon neutral by 2040. Talking about MCE’s vision towards alternative fuels, he said, “We are keeping all our options open. Right now, it is too premature to zero down on any one fuel technology. However, while we will explore alternate fuels, diesel is here to stay for the construction equipment segment for some more time.”.

“With the cutting edge technology and the rate at which it is evolving, we have to keep our options open both from a make perspective as well as from a buy perspective. So, it need not be a grounds-up development from our side, it could also be a technical tie-up or even a buyout,” he added.

Commercial vehicles

“We anticipate the tipper segment to reflect the kind of growth that we have achieved in tractor trailers and multi axles. Mahindra’s market share in trucks is about 3%, and in the tipper segment it is about 2% – that is where we intend to improve with the introduction of our new tipper,” Gupta said.

Heavy commercial vehicles (HCVs) constitute about 50% of the total commercial vehicle market. Within HCVs, there are three segments – tipper, tractor trailer and multi axle vehicles, with tippers accounting for about 30% to 35% of the market.

  • Published On Dec 15, 2023 at 11:24 AM IST

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Mahindra CE expects peak sales in FY27 after shift to BS-V; open to tie-up for green fuel tech - ET Auto

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