On April 30, 2006, the joint venture of FORCE Motors with the German truck major MAN rolled out the first few trucks made in India. There was high expectation in the Indian market from the MAN-FORCE JV. The new truck facility at Pithampur was set up at an investment of Rs. 700 crores and with capacity to manufacture 24,000 trucks, of which 12,000 were to be exported and another 12,000 sold in the domestic market.
It’s been three years since the roll-out of the first unit, and MAN FORCE has till date manufactured close to 1,500 trucks which includes both the domestic market and exports. The JV ran into product specification related issues. The European standard of cab fitments and power density raised the products cost to unacceptable levels in the Indian market.
And just when everyone started doubting the future of this JV, the company has bounced back and announced the launch of an expanded range of trucks catering to the requirements of the Indian market. The fully indigenised new range of trucks fitted with the best-in-class aggregates and conforming to MAN standards are competitively priced.
Mr. Sudhir Mehta, Managing Director – Commercial of MAN FORCE Trucks Pvt. Ltd., said: “We have gained valuable experience in the last 18 months, of manufacturing, selling and supporting over 1,500 units of the hitech, MAN CLA range of vehicles, in the Indian market. We are now poised to enter the next phase, of ‘mass marketing’. It is our aim to gain a significant market share, in the haulage trucks market. The ambitious plans of our company are aimed at establishing a strong presence in the full spectrum of the HCV market in India. Plans and actions are to gain dominance in select segments and to achieve large volumes in the market over the next five years.”
To know about this complete turnaround, I met Mr. Abhay Firodia, Chairman of MAN FORCE Trucks Pvt. Ltd., the man behind the turnaround of the MAN FORCE Trucks JV in India. At 65, Mr. Firodia, is raring to take on competition. There is evident confidence right from people working at the shop floor to the top management that the worst is over, and they can look forward to exciting times ahead.
But before we get into what went wrong with the JV, let’s look at the brighter side of things. It all started in 2003 when FORCE Motors purchased technology from MAN to manufacture engines and cabs of heavy trucks in India. But identifying a potential opportunity, MAN offered in 2005, to invest and formed a joint venture with FORCE Motors, for using the base created by FORCE Motors to export trucks with MAN technology from India to various parts of the world, and also sell in India.
The initial investment planned was Rs, 700 crores with FORCE Motors holding 70 per cent of the JV and MAN 30 per cent. A new plant was established at Pithampur right next to the Force Motors facility, and the first few trucks rolled out of the facility on April 30, 2006. The JV with active involvement of German engineers and the intended use of the MAN brand found that the trucks configured were required to be equipped to European levels of power and comfort.
Mr. Firodia said: “The MAN FORCE Trucks plant was set up in record time, with the necessary infrastructure, tooling, vendor development and the design and development of a complete range of products for the Indian market, all these were done in a short time of 2½ years. We were ready by the end of 2006 when the JV was formed to ramp up volumes. As we started selling our trucks, we were facing resistance mainly due to a few factors. In India the customer expectation of a truck is mainly from the efficiency of the drive line and not much is expected from the cab interiors. We had initially offered a product which had a robust driveline but also a comfortable cab and other peripherals adhering to MAN’s global standards of quality, comfort and safety, which the Indian customer was really not keen on. We were clearly not competitive in terms of pricing as we were priced 25 per cent more than competition”.
“Another aspect which needed some correction was in terms of the power density which was at European levels. In India typically the mass market trucks for haulage purpose run on 160 to 180 hp engine, whereas the company offered 280 hp engines. Of course, a truck with 280 hp is more powerful and can cover distance in a much shorter time but the downside is with higher power comes lower fuel efficiency and this became a point of consideration which had to be corrected. We were clearly out of the race in the mass market segment. Our original concept was to get into the mass market products but it so happened that because of the initial pricing of the trucks we got pushed into the niche segment which is the high powered ODC trucks and the specialised tipper for mining applications and this restricted our foot print in the market”, Mr. Firodia adds.
“MAN believed that they wanted to maintain premium standard in their vehicle out of genuine adherence to the European standards of safety and comforts and aesthetics. Initially it was tough to convince the MAN team to help them understand the Indian requirement but we eventually reached a common understanding of the issues involved and evolved a joint response”.
“We examined the problems in a very constructive manner. MAN has a great deal of confidence in the Indian market, and has a constructive approach in leveraging the strengths of this very unique market. A high-level team from MAN and FORCE Motors came together and brainstormed over many months and finally achieved what was required for the Indian truck market”, he added.
Mr. Stefan Holzmann, now MD-Technical of the JV, had an important role to play in evolving a close understanding of the realities of the Indian market requirement.
The product specs had to be aligned to suit the Indian customer. Some of the accessories and frills, which were part of the initial trucks launched, have been done away with. The company had to work on the power rating and find a more acceptable level.
Speaking to MOTORINDIA, Mr. Holzmann said: “A solution has been found maintaining the highest standards that MAN adheres to, while removing many of the add-ons from the truck. The power density has been appropriately moderated to provide top class fuel efficiency without compromising reliability. For MAN reliability is religion”.
Another major achievement was in the area of localisation of components. In fact, the trucks are 95 per cent localised, including the engines, transmissions, axles, cabs, interiors. This is a huge advantage which Force Motors brings to the JV, thanks to the strong engineering capabilities of the company. It was not just about i
ndigenising but Indianising the complete range of trucks.
According to him, with all this restructuring, “we have arrived at a product configuration and pricing strategy which is strongly aligned to the Indian market. This wouldn’t have been possible without the understanding and support of MAN”.
MAN has been very supportive of this corrective action. In fact, to reinforce its commitment to the India JV, MAN even increased its stake from 30 per cent to 50 per cent last year. The engineering effort that the MAN team has put in has been very constructive. The MAN engineering team realised the need to create a product which should succeed in India.
“With all the restructuring behind us, we have a comprehensive range of trucks to offer the market now. In terms of specifications, it is way above the other products available in the market but in terms of pricing it is almost on par with competition”, claims Mr. Firodia.
MAN FORCE offers the CLA series (Cargo Line Asia) of trucks in Euro 2 and Euro 3 options. The new range will include the CLA 25.220, 6-wheeled, 25-ton long-haul trucks, and the CLA 40.220 heavy duty tractors which are powered by 220 hp 6-cylinder, MAN D-08 series diesel engine. Each aggregate of the truck such as the engine, gearbox, axle and the chassis meets the highest MAN standards of reliability, efficiency and performance.
In the tipper segment, the company has introduced top quality tippers, for every application, from 18 cubic meter ‘mining’ tippers with 8×4 configuration to 12 cubic meter ‘on-road’ construction tippers with 4×2 configuration. The only product which the company is not addressing at the moment is the 4×2 rigid trucks for haulage purpose.
Manufacturing and aggregates
While most manufacturers are moving towards assembling of key aggregates, MAN FORCE has managed to create the highest level of engineering capabilities to manufacture all key aggregates in-house. Mr. Abhay Firodia says: “You cannot remove the spots of a leopard. That’s in our DNA. Our engineering capabilities are the biggest asset of both MAN and FORCE Motors and it gives us so much more confidence in the products we manufacture and sell”.
As mentioned earlier, MAN FORCE Trucks Pvt. Ltd. has established a full-fledged manufacturing facility in Pithampur. The facility is built with a capacity to manufacture 24,000 units annually. There are 3 major units within the facility. The first is engine and axle manufacturing facility, the second is the vehicle assembly line which has the chassis assembly, trim line and vehicle testing facility and the third is the export unit which is called the Truck in Box unit(TiB) where trucks are packed in knocked down condition and exported to markets like South Africa, Malaysia and Indonesia. The manufacturing facility, certified to TS 16949: 2000, has been built as per MAN’s global standards and systems.
With regard to engines, currently the trucks are fitted with the MAN 08 Series of diesel engines which are manufactured at the MAN FORCE facility. It currently offers 220 hp and 280 hp engines based on the products and market requirement. There are plans to introduce common rail Euro 3 and Euro 4 engines in the near future.
Axles are also manufactured in-house as per MAN’s technology. The company is also offering Meritor axles in certain models like in the 25.220 haulage trucks and the newly launched 40.220 which is a Tractor Trailer 4X2 configuration and this will also come with Meritor axles. There is also a 40 tonner 280 hp engine which comes with the MAN axles.
Gear boxes are manufactured at the adjacent FORCE Motors facility with licence from ZF. MAN FORCE offers both 6-speed and 9-speed gear boxes. The cab for the MAN FORCE trucks is again built by FORCE Motors. Currently the cabs offered for the Indian market are the standard yellow color units with the distinct MAN truck identity. For exports it is done as per customer specifications, like for example the trucks exported to Indonesia fitted with white cabs. Cabs are available with flat, normal and high roof with sleeper berths.
In fact, Jaya Hind, one of the group companies of FORCE Motors, is also establishing a tipper fabrication facility at Pithampur right next to the MAN facility. The tipper hydraulics are being sourced from Hyva and tipper fabrication will be done at this facility.
The new range of trucks has gone into production and is on display at various dealer locations across the country. MAN FORCE is currently doing a series of road shows in different parts of the country. By August it will have these products in volumes across India. The target is to hit a volume of 500 trucks per month by the end of this year.
Mr. Firodia observed: “Performance of our trucks was never an issue. Our trucks have performed brilliantly so far, particularly the tippers and tractor trailers. The key issue was to build volumes – for which we needed competitive specifications and pricing. This aligned, we are ensuring to ramp up our after-sales service, which is very important in the truck segment. The company has now established a strong country-wide dealer network, with excellent stocks of spare parts throughout the country, at 50 locations, in all relevant areas. Also 100 Mobile Service Vans are commissioned, to provide day and night service throughout the country”.
Exports
When the MAN FORCE JV was signed in 2005, both the companies saw huge opportunity for export of trucks to other emerging markets like South Africa, the Middle East and South-East Asia. In fact, out of the total capacity of 24,000 units, 50 per cent were meant for export. But due to the uncertainty in the truck business in the domestic market and also due to the global turmoil, particularly in the CV segment, exports were hit. The JV has so far exported over 300 units, mainly to South Africa, Malaysia and Indonesia and a few units to Russia and China.
Trucks are exported both as fully-built units and knocked-down kits or TiB (Truck in Box) as mentioned earlier. With better clarity in the domestic market, there is renewed thrust on exports, says Mr. Firodia.
Another important area which the JV wanted to focus was on component sourcing from India. This has also taken the backseat due to reasons mentioned above. There are some parts which MAN is already sourcing, like brake parts and crank shafts from Indian suppliers. There will be more intensive effort in this direction.
Entry into bus market
In 2006 MAN’s Neoman Bus Group had announced setting up of a separate joint venture for bus business with Force Motors. A letter of intent on the joint venture for production of chassis and complete buses for the Indian and Asian markets was signed. But in the last couple of years, with the main focus on the truck project, the bus project did take a backseat.
But with better clarity in the truck project, the company is now seriously working on the bus project. “We are already working on the prototypes and will be launching our buses before the end of the financial year 2009. The company is working on both the city and inter-city buses. Globally MAN is a very strong player in the bus market. The plan is to work with a dedicated body builder for building the bus bodies as per MAN designs”, said Mr. Firodia.
To sum up, the MAN FORCE JV which started well, ran into trouble later due to product cost issues. The good thing is that both partners came together and have worked enthusiastically to solve the issues and align
the products to suit the Indian market. For the current year the JV is targeting a sale of 3,000 trucks in the domestic market and 1,200 trucks overseas.
“Now there is complete consensus on the way forward. There is excellent team work, not just between the departments, namely, manufacturing, sales and marketing, R&D;, procurement, service but also between MAN and the FORCE Motors teams. And, as a result of the realignment of perspectives, there is total clarity and commitment. Both MAN and FORCE Motors are committed to the project. We will come back with thumping success”, Mr. Firodia added.
