Global CV manufactures eye on Indian Market

The Indian commercial vehicle industry is revving up for some fast-paced action. Long dominated by Tata Motors and Ashok Leyland, the market is set to witness a cut-throat competition as global players make a beeline to get a slice of one of the world's fastest-growing economies that is also seeing a surge in road infrastructure development. 

Those looking to make a cut in India include Daimler and MAN of Germany, Volvo of Sweden, Nissan of Japan and Navistar and General Motors of the US. While rising interest rates are having an impact on the market in the short-term, it is forecast to grow manifold in the coming years as roads become better and economy booms further. 

According to figures released by domestic industry body Society of Indian Automobile Manufacturers (SIAM), a total of 6.76 lakh commercial vehicles were sold in the domestic market last fiscal at a healthy growth of 27%. The money-spinner medium- and heavy-duty category accounted for 3.22 lakh units (32% in FY11) while light-vehicle market stood at 3.53 lakh units (up 23%). 

However, in line with the slowdown, SIAM forecast, the industry is likely to witness a moderate growth in 2011-12 of 14-16%, which analysts say is healthy considering the high base. The worrying factors for the industry are expensive vehicle financing (almost all vehicles are financed) and increasing commodity prices that SIAM says are retardants. 

Except for Daimler, which could not manage to keep a partnership with the Munjals of the Hero group, all the new entrants have been successful in forging tie-ups with local companies that give them an edge in sourcing at low cost and also in setting up the all-crucial sales, distribution and after-sales network. 

Volvo has joined hands with Eicher Motors while Navistar has partnered Mahindra & Mahindra, which already was expanding in the commercial vehicle space. MAN has formed an alliance with Force Motors while Nissan-sensing an opportunity in light vehicles-joined hands with Ashok Leyland. And not to be missed is Beiqi Foton, China's largest commercial vehicle maker, which plans to invest about $380 million for a 1 lakh-unit annual plant for light, medium and heavy trucks. 

To beat Tata Motors and Ashok Leyland, the foreign-local joint venture is very crucial, companies say. Vinod Aggarwal, CEO of VE Commercial Vehicles, (the 50:50 joint venture between Volvo and Eicher), says both partners drive in individual strengths. Eicher, already a strong player in the light vehicle market (5-12 tonnes), brings in a deep understanding of the Indian market, while Volvo chips in with its strong technology and processes. 

Daimler, which does not enjoy the benefits of a local partner, has decided to unveil an all-new Indian brand for the market in "BharatBenz". 


[Source:economictimes.indiatimes.com]