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MAN Trucks hits speedbreaker on localization of components

MAN Trucks hits speedbreaker on localization of components
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First Published: Fri, Jul 13 2007. 12 12 AM IST
Updated: Fri, Jul 13 2007. 12 12 AM IST
MAN Force Trucks Pvt. Ltd, the €150 million (Rs835.5 crore) joint venture between Man AG, Europe’s third-largest truck maker and the Pune-based commercial vehicle manufacturer Force Motors Ltd, to make premium trucks in India, is facing production glitches with trouble over the localization of a few components.
“We are facing some problems with localizing a few products and are behind schedule by a few months but we are hoping we can resolve the problem over the next two months,” chairman Abhay Firodia said when contacted. He declined to elaborate on the nature of the localization issue.
The company planned to export around 12,000 vehicles from this year but Firodia said the company was not making “significant” numbers of trucks. Full localization before the start of this year, was a part of the plan.
This is the second vehicle maker to report trouble over localization of components recently. Earlier this month, India’s second largest maker of passenger cars, Hyundai Motor India Ltd, said its had to bring in vendors from Korea because the Indian ones couldn’t deliver the required quality.
The MAN Force joint venture hopes to capture fast growing markets for trucks in India, parts of Asia, Africa and West Asia by making premium European-style trucks with relatively affordable price tags. The joint venture intended to cut costs by as much as 30% by localizing some of the content and MAN officials had said during the launch of the project last year that prices, at approximately €35,000, will be around half the price of similar trucks made in Europe.
The company’s plans to sell 24,000 trucks at its full capacity, in various markets around the world, seems to be delayed at least temporarily, with the localization issue slowing down production.
The joint venture had earlier announced plans to take exports to the level of Rs2,500 crore in the third year of production. The company is currently working on three models—40- and 49-tonne haulage trucks and a 25-tonne tipper—but numbers have not picked up as expected due to the problem with localization, Firodia told Mint.
“We will also look at getting into the smaller trucks and the bus segment only after we have got the current trucks on course,” he said.
The company plans to manufacture a range of trucks in the 16-49-tonne segment including long haul trucks, tippers, tractor trailers, multi-axle vehicles and speciality vehicles for applications such as concrete mixing platforms. The company plans to eventually sell around 4,000 buses every year from India.
The delay in getting the truck venture off the mark as scheduled is also likely to delay the company’s co-operation with Neoman Bus GmbH, a subsidiary of the Man Nutsfahrzeuge group to manufacture chassis and buses in India for Asian markets, people close to the development said on condition of anonymity.
While the earlier plan for the bus business was to start making a range of chassis, buses and coaches in India towards the end of 2007, it will now have to wait for the truck business to pick up speed.
India is the world’s largest commercial truck manufacturer. A total of 5,20,000 commercial vehicles were made in the country in 2006-07, up from the previous fiscal’s 3,91,083 units. India’s large infrastructure-building initiative and highly affordable production cost structure has attracted several commercial vehicle manufacturers into the country—all of these are now in ramp-up phase.
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First Published: Fri, Jul 13 2007. 12 12 AM IST