Bangalore: Eric Leblanc, managing director of Volvo India Pvt. Ltd, the India arm of AB Volvo, is moving to head the firm’s operations in Malaysia, where the multinational has a larger share of a market that is much smaller than that of India.
The world’s second largest truck maker is yet to name a replacement to Leblanc, who has been heading India operations since January 2005.
Volvo set up a venture in January with Delhi-based Jaico Automobile Engineering Pvt. Ltd to build buses and in December bought 50% equity in Eicher Motors India Ltd for $310 million (Rs1,339 crore) to set up a venture—VE Commercial Vehicles Ltd—to make commercial vehicles and compete with local rivals that include Tata Motors Ltd and Ashok Leyland Ltd.
VE Commercial will launch new models of heavy trucks with capacities between 19 to 45 tonne for moving container freight. The venture would also be the marketing agency for all Volvo trucks.
Analysts say that Volvo’s venture with Eicher motors for heavy trucks is a long-term strategy to increase market share in India but it would face margin pressures to gain it.
“How will it price the products to take market share from Tata and Ashok Leyland?” asked Vaishali Jajoo, equity analyst for automobile and transportation with Mumbai brokerage Angel Broking Ltd. “Currently, there is a huge difference in pricing of Volvo’s products with others,” she pointed out.
Leblanc, however, said, “We have grown bigger (in India) and there is opportunity for more growth.”
Volvo, among the first global commercial vehicles company to set up shop in India , is seeing customers taking more time than usual to buy new trucks used for hauling ore in mines and large loads on highways, as banks delay financing.
“Most of our customers are those who own large fleet (of vehicles). It is taking longer for them to lease vehicles (from banks),” Leblanc said, adding that it has not seen customers defer or cancel orders placed for these heavy duty trucks.
Volvo, which completed a decade in India , has sold 5,000 heavy-duty trucks in India and exported around 1,000 units, bulk of it to South Korea. It has sold around 2,000 buses in India for city and inter-city transport. Volvo has a factory in Bangalore that assembles around 1,000 trucks a year.
As the Indian economy grows at nearly 9% a year, growing demand for vehicles to transport goods and people on road has prompted global rivals of Volvo such as Brazil’s Marcopolo SA and Germany’s MAN Nutzfahrzeuge AG, Europe’s third largest truck maker, partner with local firms such as Tata Motors and Force Motors Ltd to build trucks and buses in India.
“There will be more choice for customers. It also means competition,” said Leblanc.
Volvo, which now has nearly 75% of imported systems and components in heavy-duty trucks, plans to increase local components, once VE Commercial increases its business and vendor base to gain cost benefits, Leblanc said.