Parvatha Vardhini C. | Updated on February 19, 2011


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The stock of Eicher Motors, a player in the commercial vehicles and two-wheelers space, too has benefited from the recent boom in the auto sector. A swell in demand for goods carriers post 2008 due to the picking up of economic activity, procurement of buses by the government under the JNNURM and improved realisations from sale of premium category bikes has aided revenue growth during this period.

The company sells greater than 250cc bikes under the ‘Royal Enfield' brand and has, in fact, been constrained by its capacity to meet the demand for these bikes. Operating through its subsidiary, Volvo Eicher Commercial Vehicles (VECV), the company has a toehold in the medium CVs segment. However, with the catching on of the hub and spoke model, it has focused on sprucing up its heavy vehicles portfolio. Towards this end, a new series named “VE” series of heavy trucks were introduced in the auto expo last year.

Given the strong demand and the better realisations that would flow in from higher segment bikes and trucks, the company has embarked on capacity expansions for the same. It is also rationalising its dealer network and spreading its reach with the objective of becoming a pan-India player in trucks. Although freight rates look good at the moment and there is nothing to suggest a moderation in CV sales, higher interest rates may dampen volumes going forward.

Published on February 19, 2011

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