Mahindra's Gio to take on Tata Ace !

The Gio, Mahindra & Mahindra hopes, will draw buyers from three-wheelers as well as small trucks like the Ace.

Two years ago, Mahindra & Mahindra quietly entered the three-wheeler market. These load carriers may not make it to motor shows across the world, but add greatly to last-mile connectivity in the narrow lanes of cities and towns where large trucks cannot enter. To Mahindra & Mahindra's credit, it has cornered a 17 per cent share of the three-wheeler market against competition from well-entrenched players like Bajaj Auto and Piaggio. Little did rivals know that this was also meant to prepare the ground for an interesting strategic move by the company!

Mahindra & Mahindra has come out with a small truck, called the Gio, which is priced slightly above three-wheelers but significantly below the small trucks of Tata Motors and Piaggio. Its price tag is Rs 167,000. Three-wheelers cost around Rs 140,000. The Ace, Tata Motors' bestseller, costs upwards of Rs 278,000. "We needed disruptive innovation to shake things up. By creating a new segment, which we call the compact truck, we are doing just that," says Mahindra Automotive Senior Vice-president (marketing) Vivek Nayer.

Clearly, Nayer and his men want to draw buyers from both the segments -à³­all trucks such as the Tata Ace and Piaggio Ape Truk. The market is big. Ernst & Young Partner Rakesh Batra reckons that transporters buy anywhere between 65,000 and 70,000 three-wheelers every year. This translates to sales of around Rs 1,000 crore.

At the same time, small trucks that can carry up to one tonne of weight sell around 90,000-1,10,000 in a year. Of this, the Tata Ace accounts for over 80 per cent. (The Society of Indian Automobile Manufacturers clubs these small trucks in the category of light commercial vehicles. So, their exact numbers are not known.) In value, this works out to over Rs 2,500 crore in a year. So, the market that the Gio can address adds up to Rs 3,500 crore.

Text: Business Standard

Image courtesy: www.mahindragio.com

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