Daimler India Commercial Vehicles : Ready to Move to India

The commercial vehicle segment has witnessed a stellar rise over the past six years, where sales have more than doubled to touch close to 800,000 units annually. This is a good sign of a healthy economy and there is no doubting the fact that India today is Asia’s third largest economy and growth across segments is on the rise. The trucking sector alone benefits from the fact that there is a vast amount of infrastructure development taking place, more importantly 65 per cent of the country’s freight requirement is handled by trucks. If you do the math, the potential is enormous and looking at capitalizing on this market is Daimler India Commercial Vehicles Limited (DICV).

DICV has opened its 160 hectare state of the art production facility located at Oragadam near Chennai. With an investment of Rs 4400 Crore, the facility has been set up in a record time of 24 months and houses the manufacturing unit for BharatBenz trucks, an integrated research and development center as well as a robust test track designed to rigorously test vehicles across a vast range of conditions. Incidentally, this plant is one of only three Daimler truck plants worldwide that combines truck assembly and components production at the same location. 

Speaking on this occasion, Marc Llistosella, CEO and Managing Director of DICV, stated, “Our focus on localization has resulted in more than 40 percent of our suppliers being located within a 40-kilometer radius of the plant. Overall, our BharatBenz trucks will have a localization rate of 85 percent in India.”

Looking at targeting the volume market in India, the vehicles that will roll out of this greenfield facility under the BharatBenz brand name will be based on the Mercedes-Benz Axor platform and the Fuso Canter series. The plant has an initial production capacity of 36,000 units per year, however company officials stated that the capacity can be ramped up to over 70,000 units per year as the demand rises. Production at the facility is slated to commence in the third quarter of this year and BharatBenz intends on offering its entire product portfolio of 17 commercial vehicles by 2014, which translates to almost a launch per month; a statement and a commitment that has never been witnessed in the trucking sector till date.

The aggressive nature of DICV is apparent in their approach to the market, however the going is not going to be easy. Historically, new players in the market have found it extremely tough to gain a foothold as the market is dominated by domestic players, namely, Tata Motors and Ashok Leyland, which together account for approximately 80 per cent of truck and bus sales in the country! Other international rivals have already set up shop in India including Navistar International Corp, MAN and Scania, however they account for only 15 per cent of the total market.

Competition is tough and adding to the woes is the fact that DICV has stated that their vehicles will be priced nominally higher than the competition and while the trucking business isn’t solely governed by the price of a vehicle, it does have the ability to swing a buyer’s decision.

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Having said that, the market holds immense potential and a new player could walk away with the accolades. Daimler India Commercial Vehicles (DICV) is bullish on the prospects that the market offers, after all in 2011 more than 330,000 trucks were sold in the 5-49 tonne weight class. According to industry expectations, this segment is set to grow rapidly over the next few years and DICV intends on having their piece of the pie.

Apart from the manufacturing unit, the company has also put in place the plan to have an extensive dealer network across the country. The retail network will extend to 70 locations by the end of 2012 and is set to reach a figure of 100 dealerships by the end of 2014.