India: VEVC or Volvo & Eicher Commercial Vehicles, which is a joint venture with an equal share between Eicher Motors and Volvo group, are planning to invest in a new manufacturing plant which is in Bhopal. This is happening during a time when the European rivals Scania and Man Trucks have left and exited the competitive industry of freight-carrier in India. This investment is expected to upsurge the manufacturing volume of heavy duty trucks and in turn, increase the growth of the heavy duty trucks industry globally.
The company is investing INR 400 crore in building a new plant which will have a 40,000-unit truck capacity. The plant is intended at augmenting VECV’s market share in the segment of heavy-duty trucks. Speaking after the board meeting that was held to celebrate 10 years of the joint venture, the global CEO of the Volvo Group, Martin Lundstedt said: “We have built a strong foundation in India and we want to do things consistently instead of looking at quick fixes or running behind volumes.
India is one of the five major home markets for Volvo, which not only serves as a key market but a base for development and export of vehicles.” All the businesses of Volvo in India are making money. Over the past 10 years, VE Commercial Vehicles has grown at a compounded annual growth rate of 18% and the company has constantly remained profitable. VECV has invested about INR 3,500 crore so far in the operations and by the end of the former financial year; it had generated INR 10,200 crore turnovers.
According to BlueWeave Consulting, the manufacturing base in India accounts for almost one-third of total global volumes of the Volvo Group at 70,000 units per year and sold more than 2 lakh units in 2017. According to Siddhartha Lal, MD of Eicher Motors, the company’s aim is to develop faster than the market and drive the country towards modern “value trucks” against the legacy trucks. Lal said, “We are patient, we know our time will come. We are a company that likes to keep chipping away. Consistency is what we believe in.” The company has grown by 13% in FY18, with a market share of 6.52% and sales of 55,872 units. Ashok Leyland and Tata Motors account for more than 60% of the market. The company’s market share, however, is very minor in the segment of heavy commercial vehicle, which will be the major area of growth for the future. India is one of the top manufacturing bases for the Volvo Group globally, and a key export hub for light- and medium-duty trucks and medium-duty engines. Thus, the investment by the Volvo Group and Eicher Motors will promulgate the sales of heavy duty trucks for VEVC and have a positive impact on the automotive industry globally.