AMW’s big push

Scale is the name of the game in the mainstream automobile industry. And Asia MotorWorks (AMW) has re-organised its plans to get that scale in the truck industry.

“Unless you are doing 40,000-50,000 units a year, you are not playing the game,” says Anirudh Bhuwalka, managing director, AMW. Last year AMW sold 7,000 trucks. So, AMW will launch “seven to eight products" during this financial year to realise its objective of becoming a big player in the trucking game.

The first of the launches will be a 16-tonne tipper. “That is a key segment of easily 25,000 units a year and it’s a market of close to a billion dollars,” says Bhuwalka. The other launches will include a 31-tonne tipper and a 35-tonne tractor.

Bhuwalka is targeting to fully utilise AMW's production capacity at its plant in Bhuj in the next three years. The plant’s expanded annual capacity of 50,000 units was commissioned in January 2010. Earlier, it could produce 5,000 trucks annually. “We want to straddle the entire spectrum of 16-49-tonne segments,” he states. AMW currently sells around 1,200 trucks a month. So, will AMW look at setting up a new plant once it reaches peak capacity in its existing plant in the next three years? “No, we have enough space to expand in our current plot. We are using only a third of the 600-acre plot now,” says Bhuwalka.

Among the 25-49-tonne segments where AMW is currently present, its performance is best in the 25-tonne tipper segment. The company claims it is the number two player with a 27 percent share in the segment. Along with new products, AMW also plans to localise the cabins of its trucks. The cabins are currently imported from China. The company will start manufacturing them in-house from June 2012. This move will add to the profitability of the trucks.

Bus, LCV plans on the backburner

To play the game as a big player in the truck market, AMW has set aside its plans in the bus and LCV segments for the next two years at least. The impending slowdown in the commercial vehicle sector may have also played a role in the postponement of its plans. Bhuwalka says, “For the next two years we are focusing only on trucks. And we are yet to start exports of our trucks.” Markets in the SAARC, Middle East, African regions are in the company’s radar for exports. The company says it gets an enquiry “every week” from interested parties abroad to import AMW trucks.

AMW had earlier planned to enter the bus market in 2009. It had also showcased an LCV in the 2008 Auto Expo with a plan to pit it against the likes of the Tata Ace in the market.

Ancillary business expansion

AMW, which also has a wheel rim manufacturing business, says it may run out of production capacity in the next three years. Its plant, which can produce 15 million wheels annually, was commissioned in March 2010. “This year we should do (sell) 3.5 million units, eight million in the next and touch 15 million in three years,” says Bhuwalka confidently.

With the aggressive targets set for its truck and ancillary businesses, AMW is targeting a more than double growth in its turnover this year. Bhuwalka is hoping that his Rs 1,200 crore company will touch Rs 3,000 crore during 2011-12. The overall projections are fine, but what the company will have to watch out for is the slowdown which is threatening to throw a spanner in the works of many companies.

Slowdown or not, AMW will have to keep a sound business plan in place, as every downturn is followed by an attractive growth phase.