Overall market share on the increase
By R. Natarajan, Managing Editor & Publisher
VE Commercial Vehicles Ltd. (VECV), the joint venture between AB Volvo and Eicher Motors Ltd. has emerged as one of India’s fastest growing commercial vehicle manufacturers.
The partnership formed four and a half years ago has been one of the strongest contenders in the highly competitive and fast-growing Indian commercial vehicle segment. With a perfect match between Volvo’s world-class quality and technology and Eicher’s strong knowledge and experience in the domestic market, VECV has embarked on major expansion plans in its strong efforts to increase its market share in the segments it caters to.
Mr. Vinod Aggarwal, CEO, VECV, tells MOTORINDIA about his company’s recent upsurge and future plans.
VECV has been a very strong player in the light and medium duty truck and bus segments in which it operates under the Eicher brand. In 2011, the company decided to increase its focus on the heavy duty truck segment, a move which seems to be paying off very well and as a result, it has raised its market share from two per cent in 2010 to 3.7 per cent in the segment in the first nine months of 2012. In the light and medium duty segments, the company occupies a strong market position with a share of 30.3 per cent.
The company has been consistently selling around 700 trucks per month in the heavy duty segment and is confident that the number would go up once the industry returns to normal.
Says Mr. Aggarwal: “Despite the current economic slowdown, we have continued to outperform the industry. Currently, in a period when the industry is not doing very well, we have maintained a growth rate of 2.2 per cent in the first nine months of 2012 as against an industry drop of 6.1 per cent.”
In 2011, VECV achieved an annual sales mark of around 49,000 trucks and buses and is confident of bettering it in 2012. It targets reaching the 100,000 mark by 2015. “Though the market is down at present, we are confident that in the medium to long-term it will come back strongly. We have worked out a long-term strategy and will pursue it to reach our targets”, he adds.
In terms of products, the company has grown strongly with new launches which have delivered good results in the market. The 14-tonne vehicle introduced by VECV has created a new segment altogether, bridging the gap between vehicles in the 12 to 14 tonne and 14 to 16 tonne ranges.
It has evoked excellent response in the market owing to its optimum performance. The company also has a strong sales and service network across the country and is aggressively expanding it to increase market penetration.
The bus segment has been another major growth area for the company, in which VECV’s market share had gone up from 6.7 per cent in 2010 to 9.7 per cent in 2011, while the first nine months of FY 12 has seen it rise to nearly 12.0 per cent.
With an increase in market share by nearly five per cent in two years, the company is working on further strengthening its presence in the segment. And, in order to meet the growing demand in the bus market, VECV is setting up a bus body plant near Pithampur with an installed capacity of 10,000 units annually, at an investment of Rs. 200 crores.
Future Plans
VECV is embarking on a major expansion-cum-modernization plan of its existing facilities. The company is developing a new CED paint shop on par with world class standards. It also aims to increase the production capacity at its Pithampur facility from the existing 5,500 trucks to 7,000 trucks per month within the next two years. The company will also bring out new products at regular intervals to meet customer requirements in various segments. While the company has already invested around Rs. 700 crores between 2009 and 2011, it plans to invest another Rs. 1,500 to 1800 crores by the end of 2013.
With respect to engines, Euro VI-compliant base engines with five and eight litre capacity will be manufactured at the company’s upcoming engine plant to meet the Volvo group’s global requirements for medium-duty engines for automotive applications. The move is a clear reflection of VECV’s commitment to India and its long-term plans for the Indian market. The engines from the new plant would also cater to the Euro III and Euro IV requirements of VECV products in the Indian market. The plant is being built to produce a total of 100,000 engines annually while it would start with an initial capacity of 25,000 engines when it is operational in July 2013.
Gears being one of the critical components in vehicle production, VECV is also setting up a new gear plant at Dewas which is likely to start commercial production in 2013.
The Volvo-Eicher partnership has been mutually beneficial. Commenting on the JV, Mr. Aggarwal says: “We have been able to create lots of synergies. Eicher and Volvo have their own different strengths, but if put together, then we can create a much larger pie. Eicher has very strong presence in the mass market light and medium-duty segments in India. We have a very strong distribution network. Our products are known for fuel efficiency and we create good value for customers. As far as Volvo is concerned, it is a global entity with four very strong brands namely Volvo, Renault, UD in Japan and Mack in USA. It has well defined processes and controls with leadership capabilities in product technology. They have entered the Indian mass market segment through Eicher. On the other hand, Eicher has got access to Volvo’s technology and processes. It is a perfect partnership with a win-win situation for both Volvo and Eicher.”