Bangalore: Truck maker VE Commercial Vehicles Ltd, a 50:50 joint venture between Volvo Group and Eicher Motors Ltd, aims to boost sales by up to 50% in the year to December from the previous year on the back of robust economic growth, new products and an improved aftermarket network.
VE Commercial Vehicles sold 25,500 units in the year to December 2009. This year, it plans to sell 35,700-38,250 units, said Somnath Bhattacharjee, executive vice-president for sales, marketing and aftermarket.
Aftermarket refers to the supply of accessories, spare parts, second-hand equipment and other goods and services used in repair and maintenance.
The Rs2,500 crore company, which started operations in April 2008, sells the mass market, light, medium- and heavy-duty trucks and buses from Eicher and premium, heavy-duty trucks from Volvo.
VE Commerical Vehicles will grow 40-50% on the back of the improved economic activity and the improved customer value proposition, said Bhattacherjee.
Sales target: Somnath Bhattacharjee, executive vice-president for sales, marketing and aftermarket, VE Commercial Vehicles, says the company plans to sell 35,700-38,250 units this year.
The company launched the heavy duty VE series Eicher trucks in January and plans to launch tippers and rear engine low-floor buses this year.
Over the next five years, the company also aims to double its aftermarket sales and service network from the current network of 215 locations for Eicher and more than 100 for Volvo.
Leif Johansson, president and chief executive of Volvo Group, said in an interview to Reuters last week he expects Asia to overtake Europe as its largest market by 2015, led by the robust demand in India and China.
The company is gearing up for the growth. Over the next three years, VE Commercial Vehicles plans to invest Rs500 crore to double its monthly production to 8,000 units at its Eicher plant in Pithampur, Madhya Pradesh.
Bhattacharjee said heavy-duty trucks of 16-49 tonnage, sold largely to the mining and construction industry, grow with industrial production. Light- and medium-duty trucks of 5-12 tonnage sold for freight transport trace the gross domestic product (GDP) growth trajectory.
Both macroeconomic indicators are looking robust. The Index of Industrial Production grew 13.5% in March on a year-on-year basis, marking the sixth consecutive month of double-digit growth. The government expects GDP growth of 8.5% in the 2010-11 fiscal, up from 7.2% in the year ended 31 March.
Kapil Arora, partner, advisory services at consulting firm, Ernst and Young, said he expects the commercial vehicle market to grow by 25% in the current fiscal. The domestic commercial vehicle sales stood at over 530,000 units in the last fiscal.
Market leaders Ashok Leyland Ltd and Tata Motors Ltd have traditionally cornered around 70% of the market. But new players such as Mahindra Navistar Automotives Ltd, Daimler Trucks and Volvo-Eicher are set to challenge market share, said Arora.