After numerous flip-flops, the world’s largest truck maker, Daimler AG, is finally on its way to launch a series of mass market products in the commercial vehicle (CV) segment by 2012.
Daimler India Commercial Vehicle (DICV), a subsidiary of the German auto giant, is ready to scrap its premium tag to compete in the volume market, with competitively-priced vehicles, ranging from light, medium to heavy trucks and trailers.
The CV industry, which saw one of its worst phases in 2008-09, is gearing up to witness aggressive participation from all players this year, even as India prepares for a near eight per cent growth. Tata Motors, Ashok Leyland, M&M-Navistar, Hino Trucks (from Toyota), Volvo and VE Commercial Vehicles are other leading players in this segment.
Demand for CVs is often linked to economic activities, as trucks with heavy commercial applications are used in areas where maximum spending on infrastructure takes place.
Beginning with 2012, Daimler will start manufacturing operations from its Oragadam factory, near Chennai, and will subsequently launch a variety of trucks in 6-49 tonne category. This facility, spread over 400 acres, will see investments worth Rs 4,400 crore in the next five years. Little more than a quarter of this investment, Rs 1,200 crore, will go towards research and development of products, specifically for the Indian market.
“India is a very crucial market for Daimler. We plan to launch our products in this market by 2012 and believe that we need to have an in-depth understanding of the needs of the Indian consumers, which will enable us to design products that are suited to this market,” said Marc Llistosella, MD and CEO of DICV, in an e-mail reply.
Daimler’s focus will be to have high localisation levels for all its vehicles. The trucks will have localisation up to 85 per cent, including frames, engines and axles among other crucial components.
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Some other critical parts will be manufactured or assembled in-house, while other components will be sourced from local suppliers. The engines will be contract-manufactured for light trucks, while for heavy vehicles, engines will be produced at its own facility, which has a capacity to produce 70,000 units per annum.
Daimler competes with Volvo and Tata Motors in the premium bus segment in India. While Sutlej Motors does the assembling part, Mercedes-Benz, Daimler’s most successful brand, provides the chassis.
The Indian CV industry fell nearly 22 per cent in 2008-09, with sales of 384,000 units, according to the Society of Indian Automobile Manufacturers. The fall in demand for load-carrying medium and heavy commercial vehicles was the most severe, with a 37 per cent decline.
However, the trend reversed last year, with a 38 per cent rise in sales of commercial vehicles at 5,31,000 units. Demand for heavy and medium trucks rose 36 per cent. While Tata Motors controlled 60 per cent of the market, Ashok Leyland and M&M market share stood at 27 per cent as on March 31.