DaimlerChrysler India Ltd, the Indian subsidiary of German auto major Daimler Chrysler AG, is hurrying along its plans to grab a stake in the country’s booming commercial vehicles market.
Armed with an order for about 120 Actros trucks, the company has decided to commence assembling the Actros 4840 model from imported kits in India beginning early 2008, said people familiar with the plans. The company is also simultaneously working on expanding its presence in other segments of the commercial vehicles business. On its radar are the smaller Actros 4040 model and Mitsubishi Fuso in the 20-25-tonne range to take on Tata Motors Ltd, India’s largest commercial vehicles manufacturer.
Joachim Schmidt, chairman of DaimlerChrysler India, had recently said the company would manufacture trucks from India over a year from now to meet the demand for high-end trucks in the country.
The move to assemble trucks here comes ahead of the company’s plans to eventually expand its portfolio in India for which a new manufacturing facility is being set up at Chakhan in western India at an investment of Rs274 crore.
A new assembly line is now being put in place at the company’s existing manufacturing unit at Chikhli in Maharashtra to assemble the Actros 4840, which is being sold the mining industry in India. The Indian unit has already secured confirmed orders of at least 120 Actros tippers from customers in the mining sector, including repeat orders from companies that have already bought the Actros 4840 tippers.
The company sold over 50 Actros trucks in India last year.
“Our commercial vehicles business is currently limited to the sale of the Actros in CBU (completely built unit) form,” said Suhas Kadlaskar, director, corporate affairs and finance, alluding to completely built units or essentially imported trucks. A person close to the development, who didn’t want to be named, said the move to assemble the trucks from completely knocked down kits in India stems from the fact that the company’s global truck business is on a growth phase with significantly increased sales. As a result of this, it is unable to fully cater to smaller demand from new markets.
“India is an important emerging market for the group. The truck division caters to the (Indian) demand to the extent possible, but it means that waiting period for deliveries is long. The company can tap the huge market for trucks with less difficulty if it has control over the manufacturing (of trucks),” said this person.
Daimler’s truck group reported increased unit sales, revenues and operating profit last year. In 2006, the truck group turned in record sales of 537,000 vehicles worldwide, taking revenues to €32 billion. In May, Daimler said it will sell 80.1% stake in Chrysler and change its name to Daimler AG later this year, and focus on growing its luxury car business as well as truck business. Emerging markets have played a large role in the company’s truck business globally in the last few years.
An unprecedented economic boom has spurred a flurry of infrastructure-building across India, fuelling growth in the commercial vehicles business. Some 467,882 commercial vehicles were sold in India during 2006-07.
The growth has also resulted in some global players, such as the US-based International Truck and Engine Corp. and Germany’s MAN, announcing their manufacturing plans for India.
Medium and heavy goods carriers achieved 37.65% annual growth in fiscal 2006-07.
However, there is a distinct slowdown in the current year. Demand for light commercial vehicles grew 39% last year and this segment will grow at 15-17%, analysts say as more and more transporters are adopting the hub-and-spoke model. Under this, heavy trucks carry goods on highways and small trucks take them inside towns and cities.