Maruti's LCV launch delayed due to activism against diesel vehicles

Maruti Suzuki's has missed its set date for entering the light commercial vehicle (LCV) segment as activism against diesel continues unabated.

The country's largest car maker was to launch a mini truck, which it has been developing since 2013, before March 31, but will now launch it in the coming year.

Kenichi Ayukawa, managing director, Maruti Suzuki, said, “Launching the LCV this financial year is quite difficult. So much has happened against diesel. We have to carefully evaluate next financial year when we try to launch it."

Activism against diesel hit the roof in December when the Supreme Court put a ban on sale of new diesel cars and SUVs having engine capacity 2,000cc or more.

In the Union Budget announced last month, small diesel cars were slapped with 2.5% infrastructure cess while petrol models were levied 1% cess. This is the first time that a fuel based taxation system was introduced in the small car segment.

Christened as Carry this Suzuki LCV is set to take on one of country's most popular mini trucks Tata Ace. The Carry is expected to have a payload of around 1 tonne.

Maruti Suzuki's entry into the market comes at a time when the LCV segment has just started to show signs of revival after being in the negative for the last 3 years.

Domestic sales of LCVs —defined as vehicles having weight of not more than 7.5 tonne — grew at an average of 5% in the last four months as against a fall of 7.4% during the previous six months of April-September.

Fresh on the back of new launches, Mahindra & Mahindra, the LCV market leader, was the biggest gainer of the demand revival. In January, the Mumbai-based company reported a jump of 10% in sales for load-carrying mini trucks. This was followed by a nine% increase in sales by Tata Motors, the country's largest commercial vehicle maker, during the same month. While M&M launched Supro Van and Supro Maxitruck in October, Tata Motors launched Ace Mega, a 2.1-tonne mini-truck, in August.

"Demand for LCVs is on account of both industrial and non-discretionary consumer demand for the transportation of food items as well as for transportation applications such as rural taxis. Considering the weakened demand for industry-related freight in FY16, the sales volumes were largely driven by non-discretionary consumer demand,” rating and research agency India Ratings said.

Further, the entry of truck aggregators most of whom are start-ups like Grofers, The Porter, Turant Delivery and also a Mahindra-backed venture SmartShift will likely power fresh demand for light trucks as existing assets get utilised more effectively.

Maruti will set up a separate line of dealership for the LCV venture which will be a no-frills set up. During last quarter the company announced plans to have one pilot dealership in each of the four corners of the country.