Financial Daily from THE HINDU group of publications
Friday, Jun 11, 2004
Financial Daily from THE HINDU group of publications Friday, Jun 11, 2004 |
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Corporate
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Announcements Marketing - Strategy Volvo veers into used truck market K Giriprakash
Bangalore , June 10 GLOBAL truck maker Volvo has made its foray into the lucrative used truck market in India and expects to sell around 100 units per year. "It is an extremely good opportunity because it allows more customers to use our trucks," the Volvo India Marketing Head, Mr Mansur Ahmed, told Business Line. Volvo, which started its operations in India seven years ago, has so far sold around 1,700 trucks in the country. Though Volvo has a separate division for used trucks' business, it has taken a hands-off approach in certain aspects of the business. It does not buy or sell trucks from customers but acts as a facilitator between the seller and the buyer and charges a certain fee for its role. However, the company re-conditions these trucks and charges a certain amount for servicing them. Mr Ahmed said with more private finance companies getting into truck financing, like ICICI, HDFC and Citibank, used truck market is booming. He said there was no shortage of finance and if customers have a good credit rating, they get extremely attractive packages. Mr Ahmed said Volvo's strategy towards used truck business would work well because the company does not have to get involved with registration and taxation hassles. He said as the company itself was seven years old in India, typically trucks which are between three and five years get into the used truck market. As they cost nearly half the price of a new Volvo truck, it becomes attractive enough for first time buyers. He said Volvo plans to scale up the used truck business over a period of time. Mr Ahmed said even for used trucks, Volvo offers the same after-sales support and driver training support as in the case of buying a new truck. He said used trucks market is tailor-made for those who want to test out their logistics and operating details before they firm up their plans. Some others are unable to generate adequate revenue and hence use it as an alternative route to improve their fleet's operations. He said some customers who have limited contracts which demand short periods of operating cycles, tend to buy used trucks. A finance company official said the secondary market was at least three times higher than the primary market for trucks. He said Volvo had adopted the right strategy for the used trucks' business, as it would lead to more customers using the trucks. The official said the interest rates are slightly higher for financing of used trucks and they largely depend on the individual's track record. Certain customers are offered far lesser rates because of their better track record in repayment of loans, he said.
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