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India to serve as Volvo global engine hub

周六, 8月 7, 2010

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India is further expanding its place in the world’s automotive supply chain, with a decision by Volvo Trucks and its joint venture partner Eicher Motors to invest about A$72 million in building Volvo’s new medium-duty global engine platform at a plant in Madhya Pradesh state.

By 2012, the upgraded Pithampur plant will have capacity for an extra 85,000 base engines, and will begin making 5-litre and 8-litre diesel truck engines that comply with global emission standards up to the Euro 3, 4, 5 and 6 levels.

Eicher Motors CEO Siddhartha Lal hailed the agreement, announced in New Delhi last month, as the most technologically advanced project of its type in India.

Volvo said the investment gave it a “complete facility” in India to make and assemble the new engines that would power the Volvo group’s trucks and buses worldwide over the next few years. As well, it said the engines would be used in Eicher’s range of heavy-duty commercial vehicles.

Eicher, which began life more than 50 years ago as a tractor maker, is now India’s fourth-largest truck builder behind Tata Motors, the Hinduja Group’s Ashok Leyland and the Mahindra Group, which has a joint venture with U.S.-based Navistar.

Volvo, the world’s No. 2 medium and heavy truck maker behind Daimler, signed an agreement with Eicher in 2008 to set up a 50-50 joint venture known as Volvo Eicher Commercial Vehicles (VECV) that covers Eicher trucks and buses, engineering services and the sales and distribution of Volvo trucks in India.

India’s truck market is expanding rapidly, in line with a fast-growing economy in which big infrastructure projects and general construction have created a strong demand for steel, cement and other transport-intensive items. As well, the retail consumption boom means the country’s freight operators are under pressure to upgrade their supply chains in areas such as fresh and refrigerated food transport.

India’s sales of commercial vehicles above 5 tonnes peaked at 352,000 units in 2007, before the global financial crisis saw a drop to 306,000 units in 2008 and 272,000 units last year.

But with economic growth above 8 per cent and a good monsoon under way, sales are rebounding rapidly this year. Almost 208,000 units were sold in the first six months alone, and expectations are high that full-year sales will top 400,000. 

Lal, speaking at the release of Eicher Motors’ first half results released last week, said the Indian commercial vehicle market was seeing strong growth, with Eicher-branded vehicles posting sales of just under 18,400 units in the first half of 2010, a gain of 85.3 per cent over the same period last year, against the industry’s overall 82.4 per cent rise.

He said Volvo Trucks India had maintained its “firm leadership position” in the high-end sector, with a market share of more than 75 per cent.

Its rivals include Daimler Trucks, Swedish maker Scania (now controlled by Volkswagen), MAN (which has a joint venture with local partner Force Motors), Japan’s Hino and Russian maker Kamaz.

Daimler, which sold its 5.3 per cent stake in Tata Motors at the start of 2010 for about A$420 million, will invest more than A$1 billion on a new truck-making facility at Chennai over the next five years, with production starting in mid-2012. It already markets Fuso-branded trucks in India.

Nissan is embarking on a truck joint venture with Ashok Leyland that gets under way next year, while Chinese maker Foton also is said to be eyeing the Indian market.

Domestic giant Tata Motors dominates the overall truck and bus market, with a share of around 65 per cent, followed by Ashok Leyland and Mahindra. But in a presentation to investors earlier this year, VECV said it aimed to be the leading commercial vehicle group in India by 2015, with sales of 100,000 units, including 17,000 earmarked for export. Its domestic sales target is 43,000 heavy-duty trucks for a market share above 15 per cent, 30,000 light and medium trucks for a 30 per cent-plus share, and 10,000 buses, or about 10 per cent of the market.

Along with the interest being shown by truck makers, India in the past few years has emerged as a small-car manufacturing hub for global makers such as Hyundai, Suzuki, VW, Nissan, GM and Ford. They are adding production capacity at a furious pace, both to take advantage of Indian domestic demand and the potential for exports to markets in Europe, the Middle East, Africa, Asia-Pacific and South America.

Geoff Hiscock writes on Indian business and is the author of India’s Global Wealth Club and India’s Store Wars.

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1 Comments For This Post

  1. 陈剑 Says:

    小西,这个英文不是很懂耶,能不能用中文
    我博客更新了,有空过来看看给点意见?

    [回复]

    西小西 回复:

    呵呵,有的时候懒得翻译了,嘿嘿,你用google翻译:)

    [回复]

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