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Multi utility vehicles/ jeeps The name Multi Utility Vehicle (MUV) is derived from the vehicles used by the US Army in World War II called "General Purpose" vehicles due to their variety of uses. American Motor Company (later acquired by Chrysler Corporation) introduced the MUVs to the world with brand "Willys". Mahindra & Mahindra (M&M) was the first to introduce MUVs to the Indian consumer in 1944. It began by assembling CKD kits supplied by American Motor Corporation (AMC). In 1954, M&M entered into a technical collaboration with AMC to produce "Willys" models in the country. The agreement with AMC lasted till 1974. In 1980, diesel engines were fitted to these vehicles in technical collaboration with Peugeot, France leading to a substantial drop in operating cost of MUVs. Till 1985, M&M was the monopoly leader in the MUV segment. Then in 1986, Maruti Udyog Ltd (MUL) entered the MUV segment, with its petrol engine fitted "Gypsy" model, in technical collaboration with Suzuki Motor Company of Japan. The MUV segment witnessed a flood of new models from new players in the early nineties. Bajaj Tempo introduced 'Tempo Trax' in 1992 followed by 'Sumo' from Telco in 1995. The new models introduced from 1985 onwards changed the usage pattern of the utility vehicle as passenger carriers compared to multi purpose usage.The MUV segment is influenced by the GOI notifications on depreciation norms, excise duty, diesel prices etc. These factors are dealt in detail in Government policy chapter of the report (chapter 3). The special excise duty on MUVs has been brought down to 16% and a total duty of 32% in the budget 2001-02. This did not quite affect MUV sales as the companies were able to pass this on to the consumers. Demand-Supply, Import-Export The MUV is used in transporting smaller loads over medium and small distances, providing low fixed and operating costs in comparison to LCVs. It can be used for transporting both goods and passengers. Apart from these it can be converted into an ambulance, a minivan, a pickup van or leisure vehicle. The army is a major consumer segment for jeeps. It uses MUVs for variety of uses like mounting recoil-less guns, transporting explosives, towing equipment like DG sets, gun carriers etc. The MUV per se is a rugged vehicle. The high steel body, tough parts and brave interiors make it amenable to rough handling. The high ground clearance and high power delivery make it suitable for driving over rough terrain places, hilly regions, deserts etc. Till the early nineties, the Government of India was the largest MUV buyer and continues to be the single largest segment. It is used in police, paramilitary, defense, Public and Works Department (PWD), public sector organizations etc. Since 80% of all MUVs use diesel engines, diesel prices affect economics of their usage. Till mid nineties, with adequate and relatively cheap supplies of diesel, it was not a critical factor. But with the phased removal of subsidies and linking of domestic diesel prices to international oil prices, the diesel prices are expected to fluctuate in the future. The investment environment in the country affects the demand for MUVs. The investment in new industrial and other large infrastructure projects increases demand for MUVs as these projects are located at places without proper transport infrastructure and the need to transport goods and employees exists. Generally in the past, the demand for MUVs increases during election time as they are well suited for uses like canvassing and transporting - voters, election workers, poll officials etc. The sales growth for MUVs was very slow during the 60's and 70's. MUV sales increased from 5,270 in 1960 to 9,524 in 1970 and 15,585 in 1980.The slow growth in MUV sales was primarily because of restriction in supply from the only player M&M, slow economic growth and lack of product development.The introduction of diesel engines helped in increasing the demand for MUVs in the early eighties. MUV sales increased to 41,745 in 1990 at a CAGR of 10.3% over a ten year period from 1980. MUL being a public sector company cut into M&Ms government sales, forcing M&M to aggressively tap new markets like companies and welfare organizations etc leading to increased scope of MUV usage. The downturn in economy lead to severe drop in MUV sales in 1991 to 33,150. The flood of MUVs more suitable to personal transportation in the early nineties helped the sector witness higher growth between FY92 to FY98 to reach 133,302 in FY98. FY2001 Market Share In MUV Segment Company FY2001 FY2000 Bajaj Tempo 3.4% 5.0% Hindustan Motors 0.2% 2.1% M & M 44.9% 57.1% Maruti Udyog 4.9% 7.1% Telco 24.4% 25.9% Toyota Kirloskar 19.9% 2.9% Source : SIAM The MUV segment witnessed an expansion in FY99, by introduction of Safari, a sports utility vehicle from Telco. This was a major step in the MUV segment, which had been confined to rugged and low priced vehicles. M&M has pioneered the launch of MUVs in the commercial vehicles segment.This was followed by MUL,Telco as new entrants in the MUV segment.These companies have been launching models in direct competition with M&M.In FY2000, Telco introduced an economy version of its 'Sumo' model targetted at the rural markets competing with the jeeps sold by M&M in rural areas. The company later introduced new variants of the 'Sumo' model viz; Tata SA/SE, Spacio (for the semi-urban and rural market), a goods carrier, an ambulance and a tourist vehicle.Bajaj Tempo is an upcoming player in the MUV segment and has launched the 'Gama' and the 'Judo' models. The MUV segment will be witnessing a stream of new models from existing and new players in the segment.In FY2001, sales of MUVs increased marginally by 2.8% yoy to 126,953 units.The most significant growth was posted by Toyota Kirloskar Motor Ltd . by the launch of its much sought after MUV ‘ Qualis ‘.The Qualis accounted for the significant chunk of the domestic sales and contributed to 19% of total sales.M&M however maintained the top slot by accounting to about 44% of total sales.The company launched its new ‘ Bolero – GX ‘ version in the current fiscal and is also exporting its ‘ Armada Classic ‘ version.Telco introduced some of the variants of its Sumo , Safari and Sierra versions. The exports account for just 3.4% of domestic demand for MUVs.The drop in domestic sales has forced the companies to explore new markets and look seriously at increasing exports. Exports grew from 2,470 in FY96 to 4,122 in FY2001.Most of the companies have hiked the end-prices on account of input costs, including exchange rate in the current fiscal 2001-02. Capacity In MUV Segment The capacity for MUVs cannot be categorically calculated as the manufacturers have flexibility of using the commercial vehicle capacity for producing MUVs based on demand from market. But a suitable assumption made about MUV capacity for different players is as given below. Company/year FY97 FY98 FY99 FY2000 FY2001 M&M* 91,000 103,000 113,000 113,000 120,200 Telco* 50,000 50,000 60,000 60,000 60,000 MUL 10,000 10,000 10,000 10,000 10,000 Bajaj Tempo 30,000 30,000 30,000 30,000 55,000 Toyota Kirloskar - - - 10,000 36,000 Others 5,000 5,000 5,000 5,000 5,000 Total 186,000 198,000 218,000 228,000 286,200 Source : SIAM & INDIA INFOLINE * flexible capacities Rural demand affected the growth rate of UV s in FY2001.Toyota Qualis led to a pick up in the urban utility vehicle volumes during the year. Others too launched products targeting the urban utility vehicles segment. Toyota Qualis sold 25,375 vehicles during FY01 as compared to 3,519 vehicles in FY00 and was the only company in this sector to witness a positive growth. Though Telco's total volumes in this segment declined by 3.3% in FY01, its domestic volumes reported marginal improvement. The exports are estimated to decline in FY2002 and the domestic demand is expected to grow by roughly 3.5-4%. Demand-Supply For MUVs Company/year FY99 FY2000 FY2001 FY2002( P ) Domestic demand 109,082 118,274 122,831 127,521 Exports 2,654 5,148 4,122 4,039 Total demand 111,736 123,422 126,953 131,560 Supply Capacity 218,000 228,000 286,200 286,200 Over Capacity Volume 106,264 104,578 125,938 141,050 As % of capacity 48.7 45.9 44.4 49.3 % growth in Domestic demand (16.3) 8.4 3.8 3.8 Exports (19.3) 94.0 (19.9) (2.0) Total demand (16.4) 10.4 2.9 3.6 Source : SIAM & INDIA INFOLINE     Other sector reports Previous chapter Next chapter

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