Daimler banks on exports to achieve break even

Chennai: Daimler India Commercial Vehicles Pvt. Ltd is banking on exports to help it achieve operational break even within the next two years, managing director and chief executive Marc Llistosella said on Thursday.

 

The German truck maker, which invested Rs.4,400 crore in putting up its plant in Oragadam, near Chennai, is working towards making India an export hub. Eighty-five percent of the components used in the vehicles it manufactures in the country are procured locally, making the process cost-effective.

Llistosella, speaking at an event to mark the first anniversary of the company’s operations in the country, said Daimler will be exporting “significant” volumes from India by leveraging Mitsubishi Fuso Truck and Bus Corp.’s sales network in 179 countries.

Daimler India began rolling out its trucks for export under the Fuso brand in May and aims to sell 1,000 trucks this year in 15 markets in Asia and Africa.

Domestically, Daimler India has a market share of 4-5% and is the No.4 truck maker in India after Tata Motors Ltd, Ashok Leyland Ltd and Eicher Motors Ltd.

Llistosella said in the next two years, Daimler India hopes to be among the top three.

“To get among the top 3, they will have to displace Volvo-Eicher. Daimler has had a good start because of the products and increasing reach, but they will face formidable competition from Volvo-Eicher, who will be competing with them with similar products,” said Surjit Arora, research analyst at brokerage Prabhudas Lilladher.

The Volvo-Eicher joint venture called Volvo-Eicher Commercial Vehicle is preparing to launch trucks from five tonnes to 49 tonnes and above in the next two years.

Daimler is present in 52 locations in Southern and Western India and expects to be present in 75 locations by end of 2013 and 124 locations by the end of 2014. Most of the new dealerships are expected to come up Northern and Eastern states.

“There has been a 38% decline in volumes in August 2013, compared with a year ago. And we expect only 240,000 trucks to be sold in India this year, which is the same level of 2008-09,” said Llistosella.

In the April to August period, the overall sales of medium and heavy commercial vehicles in the country fell 24.6% to 69,799 units, said Arora.
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