MPV makers target fleet operators

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Fleet operators account for a good percentage of overall MPV sales and hence is an important section of customers for MPV makers. However, manufacturers try and balance their sales between fleet and private customers, because once a vehicle model is a common sight among taxis, private buyers tend to shy away from it; the Innova is probably the only exception to this.

Over the past few months, demand for some of these people carriers from the private sector hasn’t been as strong and has made manufacturers concentrate efforts a bit more towards commercial operators. This month, commercial vehicle manufacturer Ashok Leyland launched its first passenger vehicle. Called the Stile, the MPV is a result of a 50-50 joint venture between Ashok Leyland and Nissan. It’s basically a re-skinned Nissan Evalia MPV that was launched a year ago in India. With a starting price of Rs 7.49 lakh (ex-showroom, Mumbai), the Stile costs a significant Rs 1.20 lakh less than the equivalent Evalia. The Stile aims to compete against a wide range of MPVs that includes the Rs 5-lakh Chevrolet Enjoy, the Mahindra Xylo and the current king of the segment, the Toyota Innova. But unlike these, Ashok Leyland has squarely targeted it at fleet operators; it will be sold through Ashok Leyland’s commercial vehicle dealerships. According to Dr Sumantran, vice-chairman, Hinduja Automotive, “We are targeting mainly fleet operators, hospitals for their ambulances and airport taxi services.” The strategy here is to segregate the Evalia and Stile and distinctly target them towards private and fleet owners, respectively. But despite this, Nitish Tipnis, director of sales, Hover Automotive India, admits, “Nissan hopes to have a 50:50 ratio between the fleet and individual buyers,” further hinting that fleet operators are important to improve profitability.

M&M would agree. Sales of Mahindra’s Xylo have steadily declined by about 37 percent over the last year. In order to improve its market share, Mahindra too has launched a bare-basic nine-seater variant of the Xylo MPV called the Xylo D2 Maxx. Fleet operators typically buy the cheapest variant of a given model (devoid of most style, safety and comfort-oriented features) to minimise their capital expenditure. Targeted mainly at fleet operators, the Xylo Maxx comes with nine seats. Using basics such as black bumpers, wing mirrors and steel wheels help in pricing it competitively at Rs 7.12 lakh. This, coupled with a sizeable 5 year/1,00,000km warranty, makes it a viable option for fleet operators.

The Toyota Innova has always dominated the segment by consistently clocking a respectable 5,000 units/month. But the Innova has also seen a steady price hike since its inception and the latest base variant too costs more than Rs 12 lakh, making it significantly more expensive than its competition. This could prompt some commercial operators to turn their attention towards Ashok Leyland’s Stile and the new Mahindra Xylo D2, causing Toyota to lose a slice of its commercial sales.

Automakers generally dislike products being stereotyped as taxis or fleet vehicles. But with dwindling sales, they do not have much choice left apart from concentrating their efforts in the direction that improves their bottom line.