L&T to market Scania trucks

L&T has reached an understanding with Swedish heavy vehicle major Scania to distribute its range of multi-axle trucks in India. These heavy-duty trucks, in the 300-500 hp range, will cater to the needs of the construction and mining sectors. The trucks will complement L&T's range of hydraulic excavators that are used in mining and construction industries.

Scania, with a turnover of US$ 8.8 billion, is a leader in trucks of capacities exceeding 16 tonnes, heavy-duty buses and engines for mining, power generation and marine applications. Currently, about one million Scania vehicles are in operation in 100 countries in Europe, Latin America, Asia, Africa and Australia.

It is expected that L&T will take the completely-built-up (CBU) import route to get the Scania’s into dealerships. Mercedes has taken a similar route in getting the Actros into the country. L&T has no expertise in making trucks, and has announced that it needs alliances to grow. The company markets and provides service support for hydraulic excavators manufactured by L&T-Komatsu, a joint venture (JV) with Komatsu Asia & Pacific, Singapore, a wholly owned subsidiary of Komatsu, Japan. Another joint venture, L&T Case Equipment has equal equity participation by L&T and CNH America LLC, and makes loader backhoes.

The Scania deal is significant because the company had earlier wanted to tie-up with Ashok Leyland. Reports now suggest that Ashok Leyland may tie-up with Volvo instead. The fact that L&T is targeting the heavy tonnage vehicles for the construction and mining businesses has resonance in Tata Motors’ belief that these sectors will drive growth in the heavy vehicles industry. The company has already launched the Novus tipper to cater to the needs of the mining and construction industries.

Scania will be the second Swedish company to come to India, after Volvo. Its advent is testimony to the growth potential of the Indian economy. There is a saturation of business across Europe, and the Indian economy which has been setting a scorching growth pace is expected to fuel the growth plans of these European majors. Many companies are also considering making India the hub for exports to the region.

The deal could not have come at a more opportune moment. With the emphasis on better road infrastructure, carrying heavier loads has become imperative, and heavy tonnage trucks stand a better chance of making a dent in the market.