Strong Growth Global Commercial Vehicle Companies Struggle for Indian Market


Recently, the growth of Latin America’s largest economy has given rise to “brick-up” worries. In the BRICS countries, the Indian economy has continued its downward trend. However, these negative factors did not extinguish the enthusiasm of global commercial vehicle companies to enter India.


Currently, Daimler, Iveco, Volvo, Navistar, Hino, Man Group, and Foton have all or are currently investing in factories in India, and some of them are exclusively for the Indian market. After China, India has become a big cake for global commercial vehicle companies.


Recently, the Indian government stated that it hopes to attract more than US$100 billion in investment by 2017 to solve the problem of aging domestic infrastructure. Its determination to upgrade infrastructure has undoubtedly strengthened the confidence of global commercial vehicle companies to develop in India.


Strong growth


According to data released by the Central Bureau of Statistics of India on November 30, India's economy in the third quarter of this year increased by 5.3% year-on-year, which was lower than the 5.5% in the second quarter, which was in line with the first quarter. This is already India's economic growth rate is lower than 6% for the third consecutive quarter, much lower than the growth rate of the previous two years.


Due to the economic downturn in India, the market demand for commercial vehicles in India (especially for medium and heavy commercial vehicles M&HCV) has been declining in the past few months. According to data from the Indian Automobile Association, India’s sales of M&HCV fell by 22.94% year-on-year to 20,836 units in October this year. In October, India’s M&HCV sales volume was 27,038 units. From April to October this year, the cumulative sales of India’s M&HCV from the same period last year 187818 vehicles fell 13.99% to 161,533 vehicles.


India's huge market potential and fast-growing economy have always attracted the attention of investors from all over the world. The decline in the Indian market in 2012 did not allow global commercial vehicle companies to stop or slow down into the footsteps of Indian companies. Because they look at the tremendous potential for development that it has in common with China and other developing countries.


Analysts say that for an emerging economy like India, which is eager to provide jobs for an expanding population with a growth rate of at least 8.5%, the economic growth rate of less than 6% is not a small blow.


In order to win the 2014 election, the Indian Singh government must ensure economic growth. Singh’s chairman of the Economic Advisory Committee, Rajarajan, said: “If we want to achieve 6% growth, we need to see very strong growth in the second half of the year.”


Among the many means of stimulating the economy, infrastructure construction can provide a powerful engine for economic growth. It is understood that in order to stimulate the economy, the Indian government is building highways, ports and railways throughout the country to support the economy. This good news made the world's commercial vehicle companies excited.


Increased competition


The scent of the Indian automobile market has attracted many competitors. However, due to the large market share of Indian independent brands, it is not easy for foreign investment companies to survive.


Similar to the Chinese truck market, local Indian companies have dominated the low-end truck market. The high-end market is still dominated by European commercial vehicle companies such as Daimler and Volvo. While sharing high-end market cakes, these European commercial vehicle companies have also penetrated the low-end market through joint ventures and cooperation.


In order to achieve the goal of "increasing the market share of heavy commercial vehicles in India to 15% by 2015". The Volvo Group worked with the local Indian company Ache Motors to focus on the 25 to 49 tons of medium- and heavy-duty trucks, and competes directly with Tata's Prima and Ultra series trucks and the AS Hulklander U-series trucks.


Another international commercial vehicle giant Iveco CEO Alfredo also said that Iveco intends to set up a joint venture in India to advance into the Indian truck market. He believes: "The only way to succeed in the Indian market is to find a strong partner in the region."


Take root


However, for the level of product technology, for Chinese commercial vehicle companies located between local Indian companies and European commercial vehicle companies, Indian trucks are in a competitive relationship with similar Chinese products, and it is not easy for domestic companies to divide a market.


India’s trade protection policy has always made it difficult for Chinese commercial vehicle products to be exported to the Indian market. Two-phase trade-offs, it is undoubtedly the best way to compete with them.


Low-cost involves the company's localization management, parts procurement production, technology development, human resources cost control and the development and establishment of market channels. In addition, we must also deal with the problems that develop in a country with a different cultural background and subtle relations.


On this difficult road to development, Foton Motor made a good start for Chinese truck companies that later entered the Indian market. It is reported that the Foton India plant will be built in the second half of the year, with an initial production capacity of 100,000 vehicles, mainly producing commercial vehicle products. Fukuda India also plans to further increase production capacity in India.



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