Volvo banks on India JV for bigger global play

Murali Gopalan Mumbai | Updated on January 11, 2018


Pithampur facility will meet needs of Quester truck in Asia-Pacific

Volvo is banking on its India joint venture with Eicher Motors, VE Commercial Vehicles, to take its global script in trucks and engines to the next level.

“Asia is a big growth engine for Volvo and India’s role becomes critical. We had the entire management team from Volvo visit our Pithampur plant in Madhya Pradesh recently and they were delighted with the pace of progress,” says Vinod Aggarwal, MD & CEO of VE Commercial Vehicles.

What was especially reassuring was the level of manufacturing competencies at the Pithampur facility. The most recent mandate is supply of five and eight-litre engines to Volvo Penta which will be used for a variety of industrial applications. “With this, we are getting more inroads into the Volvo group,” says Aggarwal.

Engine capacity at the new plant is 60,000 units annually which can be increased to one lakh units. Apart from Penta, shipments are also made to UD Trucks, part of the Volvo group, for the Quester truck in the Asia-Pacific region. Other new models are planned under the UD brand where, once again, engines will be supplied from Pithampur.

Beyond the global business, Aggarwal is pleased with the pace of progress at VE Commercial Vehicles since the time the joint venture came into being way back in July 2008. “Our nine year journey has been very satisfying with our market share improving across segments,” he says.

The best showing has come about in light and medium duty trucks where VE Commercial Vehicles has a 33.5 per cent share and is a “strong No 2”. This was 26 per cent when the joint venture was created in 2008. Likewise, the share of buses has grown over the years from six per cent to 17.5 per cent though the heavy duty space has been relatively modest from one per cent to five per cent.

“We would like to become a more respectable player in heavy duty trucks with a 12-15 per cent share by the end of the decade,” says Aggarwal. This may seem a bit too ambitious given the slow pace of growth since the Volvo-Eicher partnership was formed nearly a decade ago. Yet, the CEO is convinced that the new range under the Pro series umbrella can deliver the goods.

“We can meet customer needs for modern trucks and technology at competitive price points. For this, we also need to create the right experience and aspiration levels in the market and gradually change their thinking,” says Aggarwal.

The heavy duty space also offers tremendous potential in value terms though competition is stiff from established players like Tata Motors and Ashok Leyland as well as aggressive newcomers like Bharat Benz. Aggarwal believes that the Pro 5000 series launched some weeks ago will complement its 6000 and 8000 series siblings in the heavy duty space for a host of applications.

“We launched the Pro series in December 2013 and they are doing extremely well even though the industry is not graduating quickly enough,” admits Aggarwal. For now, the Pro 6000 and 8000 series are jointly doing about 250 units each month when their numbers could actually be a lot more. While fleet operators are clearly not moving up the value chain at the desired pace, all this could change in the coming months.

“With the Goods and Services Tax regime coming in coupled with better infrastructure development, we are confident that the Pro series trucks will do very well. They can do long distances and better efficiencies will attract a new generation of truckers,” says Aggarwal. The confidence is based on the premise that younger fleet operators are more progressive in their outlook with a keen desire for better technology.

Published on May 16, 2017

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