Manufacturing India-Commercial Vehicles

The production and sales of commercial vehicles tell a lot about the country’s economy. It indicates the country’s growth. Over the years, India was having two major manufacturers in cars and trucks. Though older car manufacturers-Hindustan Motors and Premier Automobiles are on way out, truck manufacturers-Tata Motors and Ashok Leyland are still going strong, though some MNCs such as Volvo and Mercedes have also entered the commercial vehicles’ market.

Tata Motors are the fourth largest commercial vehicles manufacturer in the world and the topmost in India. Ashok Leyland is the other major commercial vehicle manufacturer in India. With Hinduja, Ashok Leyland is attempting to enter newer market. Its collaboration with Nissan and Renault has launched a small truck to compete with Tata Motors’ innovative and very popular ACE.M&M,and AMW are other new major players in commercial vehicles manufacturing.

The attempt of many of the Japanese truck manufacturers (Mazda-Swaraj, DCM-Toyota, and Eicher-Mitsubishi) to enter India for producing medium duty commercial vehicles in 90s failed. It was the time when Hindustan Motors was tying up with Isuzu Motors to manufacture some of their commercial vehicles including the buses in Halol, Gujarat. That would have been a great project for the local company as well as for the country, as both the dominating players in commercial vehicles were using almost obsolete old technologies that over the years have been upgraded with help from associates. Tata Motors could do that because of the acquisitions of Daewoo Motors of South Korea. Ashok Leyland took the assistance of Hino Motors. Hindustan Motors failed to continue with the collaboration with Isuzu Motors and the project ended because of the financial reasons and perhaps the poor strategy of the management.

Isuzu Motors are trying to enter India again and all on its own. Isuzu Motors India Pvt. Ltd, a wholly owned subsidiary of Japanese auto maker Isuzu Motors Ltd, plans to set up a light commercial vehicle (LCV) manufacturing plant in Chittoor district of Andhra Pradesh at an estimated cost of Rs.1,500 crore.The plant, which will produce 120,000 units annually at peak capacity, will commence operations in 2015-16.

Volvo and Mercedes have entered India and performing fairly well. <a href=”http://www.vecv.in/aboutus-overview.aspx”>Volvo has also tied up with Eicher for commercial vehicles for larger tonnage.

As reported, even amid the slump in the automobile sector, when major automobile companies are reviewing expansion plans, the Renault-Nissan alliance in India is going the whole hog on its expansion plans. The Ashok Leyland-Nissan Dost LCV has turned into a runaway success for the commercial vehicle manufacturing joint venture between Indian Utility Vehicle major Ashok Leyland and Japanese automaker Nissan.

With improving infrastructure of roads and growing industrial activities, the manufacturing of commercial vehicles will require the latest technologies with thrust on fuel efficiency and emission control. The domestic as well as MNC manufacturers will also export in good numbers to balance the cyclic demands. Another good news for expanding business will come from Indian Defense Services with increasing demand to use locally manufactured products.

The commercial vehicles segment in India even in the slow economy present interesting trends. The M&HCV segment is witnessing steady increase in share of heavy duty, long haulage trucks owing to improvement in road and highway infrastructure. But in the LCV goods segment, the share of sub 1T segment is increasing with the emergence of the hub-n-spoke model and increasing demand for last mile connectivity. Higher tonnage trucks (16T+) offer higher profitability as operating costs (besides fuel) are similar to lower tonnage vehicles. The introduction of newer, efficient and advanced platforms/vehicles by both incumbents as well as foreign OEMs has further escalated the advantage.

The commercial vehicles segment in India even in the slow economy present interesting trends. The M&HCV segment is witnessing steady increase in share of heavy duty, long haulage trucks owing to improvement in road and highway infrastructure. But in the LCV goods segment, the share of sub 1T segment is increasing with the emergence of the hub-n-spoke model and increasing demand for last mile connectivity. Higher tonnage trucks (16T+) offer higher profitability as operating costs (besides fuel) are similar to lower tonnage vehicles. In India, the LCV segment is currently dominated by sub 1-T and pick-up segment vehicles.Tata Motors through its innovative ACE and M&M have performed excellently. While multi-laned highways are cutting down the turnover time between metros and cities, roads laid out under Pradhan Mantri Yojana in rural India are making sub 1-ton vehicles popular.

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