MAN Force Trucks, the recently dissolved joint venture between MAN Truck and Bus of Germany and Force Motors, was never on a strong wicket in the Indian commercial vehicle space. It was primarily the absence of ‘mass market' products that bogged the company down.

Although its tippers sold reasonably well, the company's haulage trucks were considered expensive. Despite being in the business for more than five years, sales never gained traction. For example, as against an installed capacity of 24,000 units, the venture managed to sell only about 4,000 vehicles (domestic and exports) in 2010-11. As on March 31, 2010, the company had an accumulated loss of about Rs 268 crore. Moreover, Force Motors' idea of going big on exports from this venture never took off.

Maturing market

However, this decision by MAN to venture on its own in India comes at a time when the Indian commercial vehicle market is maturing. Customers today are beginning to overlook a higher initial purchase cost in favour of the life-cycle cost of the vehicle. Market leaders, Tata Motors and Ashok Leyland, have already lined up products in the 16-49 tonne segment for the performance-sensitive customers ( PRIMA and U-Truck).

This implies that besides catering to mass market, commercial vehicle players can now look to carving a place for themselves in the growing niche segment.

So, the decision can be seen in the light of MAN wanting to tap the opportunity with a free hand in the ‘value' segment. Even as competition intensifies, it can put to use its greater knowledge of the Indian markets and its long-standing relationship with local suppliers. MAN can also tailor its offerings to suit Indian customers.

Daimler Plan

Incidentally, this could have also been triggered by another German auto-maker, Daimler, stepping up its plans for India. The company has already rejigged the product mix to include vehicles with lower horse-power engines in recent times.

As for Force Motors, it has two choices. The company has entered into the ‘personal vehicles' segment with the launch of the Force One and is contemplating another launch next year. So, it may strategically decide to stay out of the medium and heavy commercial vehicle space. On the other hand, considering its technical collaboration with Daimler for its other vehicles, it could join hands with them. It could also collaborate with partners willing to explore export opportunities, as that has been one of its points of contention with MAN.

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