Volvo-Eicher focus on heavy trucks
Despite the current slowdown in the economy which has adversely affected the commercial vehicle industry, Siddhartha Lal, managing director of VE Commercial Vehicles Ltd, a JV between Eicher and Volvo, has recently stated that the company will be launching two new products in the heavy duty truck segment and would also look at ways to enhance exports.
“Heavy duty trucks are an area of priority. In India it is the largest segment in terms of revenues and profits. In fact Eicher has been in this area for some time and Volvo is the world leader in this part of the market. Together, we expect that we will be able to make big gains in this segment” said Lal.
In order to become a full range player, he said the company will introduce 6x4 tractor trailer and tipper models. “These are the products that we shall be looking at in the next 24 months. The rest of the product range we have covered with our 4x2, 6x2 and 8x2 trucks which go upto 31 tonnes. We also have a 4x2 tractor-trailer, which is a 40-tonne vehicle and a 6x4 tractor which is a 49 tonner. In Eicher we have models ranging from five to 40 tonnes and Volvo has the 8x4, 31-tonne tipper.” he added.
The JV will also cater to the over-dimensional cargo segment in India, through Volvo with these models having the ability to transport loads from 150 to 300 tonnes. “We control this segment of the market with these trucks used to transport project cargo like turbines for power plants,” commented Lal
“This is just the start and the first area where synergies are coming into play is the governance of the company, the people and personnel. With regard to products and technology, these are under development. Our primary aim is to become a full range CV player with models ranging from five to 50 tonnes and within that to become the leader in the heavy truck segment. We will also offer a range of services like sales, service, spare parts, leasing and vehicle insurance, so that a transporter’s entire needs are met by us.” said Lal.
Strong platform in LCVs
Lal noted that the company has a very strong platform available in the light commercial vehicle segment. Over a period of time it is looking at improvements to this platform. “Coming into this JV, we have a strong history in the development of LCV platforms. This is very local knowledge for developing cost-effective solutions for emerging markets. Volvo can bring in technology, whether it is in truck components or testing. We will be leaning on their global capabilities in the medium duty segment as well. While Volvo is extremely strong in all the developed markets, it is still making inroads into developing markets like India. So the product range that Eicher has, including the heavy duty range, is a very strong platform which Volvo also believes can be leveraged.” said Lal.
As for exports, the company is looking at the emerging markets to complement the Volvo Group brands which include Volvo trucks, Nissan Diesel, Mac and Renault. This will be with some Eicher trucks in developing markets in Asia and Africa.
Talking about the worsening economic climate, Lal said it is very difficult to predict growth in the coming months. “We are doing our planning after taking into consideration various scenarios. The year 2009 will probably be way below 2008. But I foresee things improving in the next six to eight months, but not dramatically. In the current financial year, the first half was looking better than last year, but the next quarter is looking very weak. The stimulus package by the government will have a trickle-down effect, but the basic damage has been done already. It will take a while to undo this. Financiers will remain reluctant to lend money and an increase in government spending will not have them opening up their purse strings immediately. The liquidity crunch is also a very major problem for the CV industry", concluded Lal.
Eicher Motors Ltd (EML) and Volvo of Sweden have formalised their joint venture recently. The JV comprises Eicher Motors’ entire truck and bus operations and Volvo’s Indian truck and service operations. Besides commercial vehicles, the joint venture also includes the components and engineering design services businesses of EML. However, Royal Enfield Motorcycles remains outside the venture and continues to operate under EML.