Ecommerce boom spurs demand for commercial vehicles

The ecommerce boom in the country has spurred the sales of commercial vehicles with industry leaders acknowledging its role in the industry's strong recent performance and this is only expected to increase.

Ravi Pisharody, executive director (commercial vehicle business) at Tata Motors, said the company sold around 1,000 mini trucks which are being used for last-mile deliveries. "Over and above this, we retail 100-200 small commercial vehicles (a month), which are utilised for e-commerce-related goods movement."

Vinod Dasari, managing director Ashok Leyland, noted that ecommerce was definitely making a difference. People now prefer to order for products online rather than visit the retail outlets. "These products are shipped from some central warehouses and transport has to be through trucks," he said. "It is increasing our business."

While ecommerce still accounts for only a small part of the domestic freight industry, the growth potential is significant. For commercial vehicle makers, the revenue opportunity from the ecommerce boom is projected by some executives at as high as $500 million over the next three to four years.

Analyst estimates on India's e-commerce market vary, but all point to exponential growth with more Indians getting online to buy everything from groceries to high end gadgets and garments from Flipkart, Amazon, Snapdeal and other e-commerce sites.

Says an industry analyst: "Logistics requirement for ecommerce will grow as exponentially as ecommerce. Specialised needs of the burgeoning ecommerce and cold chain industry will spawn a range of opportunities for niche organised logistics players."

While the demand has so far been mostly for light vehicles that are used for last-mile connectivity, industry executives expect it to spill over to the heavier vehicles as well. The Boston Consulting Group predicts the market to grow to $50 billion by fiscal 2020 from $12 billion now.