Pune: Following a slump in commercial vehicle sales, bus and truck maker Force Motors Ltd has postponed indefinitely its bus manufacturing joint venture with Europe’s third largest truck and bus manufacturer, Germany’s MAN Nutzfahrzeuge AG.
“The demand situation in the market is depressed at the moment and we have decided to put the bus project on the back burner till we manage to get the existing truck project with MAN stabilized in terms of production and marketing,” said Abhay Firodia, chairman and managing director of Force Motors.
Commercial vehicle sales in India, considered one of the world’s most lucrative markets through early 2008, have hit a trough, forcing manufacturers to cut production and even shut plants for days at a time to prevent inventory build-up. Commercial vehicle sales dropped 36% in October from the same month last year, according to data from the Society of Indian Automobile Manufacturers.
Applying brakes: Force Motors managing director Abhay Firodia. Amit Bhargava / Bloomberg
As part of the 70:30 Force-MAN joint venture, Force Motors was set to build a new plant to manufacture buses at Pithampur, near Indore in Madhya Pradesh, where it currently makes a range of heavy trucks with MAN.
The project was scheduled to invest up to €300 million (Rs1,845 crore) to produce at least 4,000 buses annually.
The manufacturing unit would have also produced chassis and a range of front- and rear-engine buses, low-floor city buses and coaches to be sold in India and exported to Asian and African markets.
Several global players in the commercial vehicles business, including the world’s largest truck maker Daimler AG , second largest Volvo AB, and Navistar International Corp., are already in the domestic market in joint ventures with Indian auto manufacturers.
Firodia also confirmed that production and sales of the company’s trucks have fallen in the domestic market due to the slowdown in the economy. He said while the company has exported 150 units of heavy trucks to South Africa, plans to step up sales will now be slower. “We have 21 export capable truck models developed and hope to export them once the market picks up again.”