Volvo may sign venture with Eicher tomorrow

Swedish bus maker Volvo is likely to announce a strategic alliance with New Delhi-based commercial vehicle (CV) maker Eicher Motors.

The announcement, which is expected on Monday, will scale up the foreign company's presence in the rapidly growing CV market in India. Volvo now makes buses from its Bangalore facility, but does not have a huge presence in the country's rapidly growing trucks market. India is the fifth-largest CV market in the world.

Sources close to the development said the new venture is likely to make trucks. However, the exact details of the joint venture could not be ascertained.

They added that the Lal family, which holds 61 per cent stake in Eicher, will not be a minority stakeholder in the JV.

Volvo has expressed keen interest in bringing its wide range of commercial vehicles to the country.

Eicher, on the other hand, has been saying for quite some time that it is willing to shed some stake, provided the partnering company brings technology on the table.

The joint venture may focus on exports similar to other players in the market such as Mahindra International, Man-Force and Ashok Leyland-Nissan among others. This will help Volvo Eicher post better margins, taking advantage of the low-cost manufacturing expertise in India.

Eicher had recently forayed into high-end luxury buses "" an exclusive preserve of heavyweights such as Volvo and Ashok Leyland. This included buses with front and rear engine dimensions.

The Indian CV market of late has seen intense activity as international majors made a beeline to grab a pie of the Rs 30,000 crore market.

Chennai-based Ashok Leyland signed a joint venture with Japanese giant Nissan for making light commercial vehicle for the export as well as domestic market.

Early this year, M&M entered into a joint venture with International Engine and Truck Corporation for making heavy trucks for the export and domestic market. European CV maker MAN and Pune-based player Force Motors also entered into a similar JV, to make a wide range of products at its facility in Maharashtra.

Daimler too signed a deal with bus body builder Sutlej, for buses.