Competition in LCV segment set to heat up

Competition is set to heat up in the light commercial vehicle (LCV) segment, with US-based car maker General Motors, French auto major Renault SA, Chinese commercial vehicle manufacturers Beiqi Foton and Jianghuai Automobile Company (JAC), exploring modalities to launch products in the country.

While General Motors is gearing up to introduce LCVs in collaboration with Shanghai Automotive Industry Corporation (SAIC) by early next year, Beiqi Foton is scouting for locations in Maharashtra to set up its first manufacturing facility outside China. Renault and JAC have initiated feasibility studies to launch commercial vehicles in India.

Jerome Stoll, executive vice-president (sales, marketing and LCV), Renault, said, “We are interested in the LCV space. I believe there is a strong potential. There is demand for LCVs in India, Indonesia and Russia. We are studying the market and looking for products which would make business sense.”

Recent times have witnessed a buzz in the Indian commercial vehicle segment —which clocked sales of 6,76,408 units in the last financial year—with the entry of global players like Navistar and Marcopolo, among others. While medium and heavy commercial vehicle sales grew by 32 per cent in the last financial year to 322,788 units, LCV sales shot up by 23 per cent to 353,620 units.

To cash in on the growth momentum in the LCV segment, General Motors has invested close to Rs 1,125 crore to develop two LCVs in association with SAIC. The company would commence trial production of the vehicles post the festive season this year. Work is underway to expand capacity to 110,000 units from the present 85,000 units to roll out LCVs from GM’s facility at Halol, Gujarat.

In May, Beiqi Foton too, announced an investment of Rs 1676 crore to set up a facility in western Maharashtra. The facility would have an initial capacity to manufacture 100,000 vehicles. The first product from Foton is scheduled to hit the Indian market by 2013. The company is exploring options to sell light, medium and heavy commercial vehicles in India.

Foton Motor, a subsidiary of Beijing Automobile Group Co Ltd, is the world’s second-largest commercial vehicle manufacturer after Daimler. The company sold 682,800 vehicles in 2010.

Another Chinese auto maker, JAC, is also eyeing an entry into the LCV space in India. “India is a key market for us. We have passenger cars as well as commercial vehicles in our portfolio. To begin with, we are looking at launching commercial in India”, said a spokesperson from state-owned JAC, China’s leading light commercial vehicle manufacturer.