Eicher, Volvo plan new unit to cater to Europe

Eicher, Volvo plan new unit to cater to Europe

New Delhi: Eicher Motors Ltd and Volvo Group will invest Rs800 crore in India over the next three years to increase production capacity and set up an engine plant that will cater to the Swedish partner’s European market.

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“We will be investing Rs500 crore to double our commercial vehicle capacity to 8,000 units per month in the next three years," Eicher Motors managing director and chief executive Sidhartha Lal said on the sidelines of the World Economic Forum’s India Economic Summit in New Delhi on Tuesday. “We are also investing Rs300 crore to set up a medium duty engine plant, which will cater to Volvo’s European needs."

The plant will be come up at Pithampur near Indore, Lal said. The combined investment will be funded through internal accruals and the plant is expected to be operational by 2013.

The facility will have a production capacity of 85,000 units per year. The company will launch a 25-tonne tipper truck and a rear-engine low-floor bus in the next five months.

In 2008, Eicher Motors formed a joint venture with Swedish truck maker Volvo to focus mainly on the distribution of commercial vehicles in India and overseas.

Lal said the company is in the process of setting up a new facility to boost the production of its Royal Enfield motorcycles to 10,000 units per month.

Currently, there’s a waiting period of four-eight months for some of the motorcycle models.

“We are trying to bring down the waiting period to three months by early next year," Lal said.

Mint had reported in August that the company may set up a second factory near Chennai to overcome capacity constraints that make it difficult for the company to meet demand.

It’s in the process of identifying a new location for a factory near the plant it has at Thiruvottiyur in Chennai.

The company’s existing plant has been producing 55,000 bikes a year and can be pushed to 70,000.

It plans to raise the current Royal Enfield capacity to 6,000 units per month by next year from the existing 4,000 units.