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Volkswagen to take on big commercial vehicle brands

Tata Motors, Ashok Leyland command 80% market share of medium & heavy commercial vehicle

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Scania, the little-known Bangalore-based commercial vehicle maker has been selling heavy duty trucks in India in collaboration with engineering major Larsen and Tourbro since 2007.

The Sodertalje, Sweden-based company, which is owned by Europe's largest auto maker Volkswagen, launched a intercity bus today will take on Volvo and Mercedes in the premium segment of the market.

Moving forward the truck and bus manufacturing company aims to join hands with another Volkswgen group company to streamline operations, reduce cost and improve efficiencies. MAN has been operating in India since 2006, initially through a joint venture with Pune-based Force Motors and independently later.

Though both the companies presently operate at the premium end of the truck and bus market, through proposed collaboration and joint work on research and development the aim is to move to the mass market segment where Indian companies operate.

Both companies can look forward to sharing of chassis, components, engines and bus body facility in the future, said a senior executive of India on the sideline of the bus launch. in India and abroad uses the same method of sharing amongst Volkswagen and Skoda cars.

Anders Grundstromer, managing director, Scania Commercial Vehicle India and senior vice president Scania Group, said, "In the R&D and production operations of course we are talking (to MAN) we dont have a concrete projects yet but we are talking but in the sales and service part we regard MAN as a competitor".

Indian truck and buses producers, traditionally led by and Ashok Leyland, operate in the affordable and mid-range segments of the market. Newer entrants and other players such as Mahindra Navistar and Daimler India Commercial Vehicles, Eicher and AMW also operate in the same segment.

Both Tata Motors (55%) and (25%) command 80% market share of the medium and heavy commercial vehicle market in India, according to data supplied by the Society of Indian Automobile Manufacturers.

Scania has so far made an investment of Rs 250 crore in India. This includes cost for setting up the facility in Bangalore. The 45 to 53 seater multi-axle Scania Metrolink bus is the first of its kind made by the company built specially for the Indian market.

The Swedish company intends to inaugurate this facility, which has about 2,500-3,000 units per annum capacity, in June this year. The second phase of expansion will more than double the capacity with additional investments.

The market for premium buses (Rs 65 lakhs and above) in India lies in the region of 1,000 units per year. This is expected to grow to 5,000 units in the next five years. The Scania facility can built buses as well as trucks.

Initially the company will import buses from Singapore and intends to sell at least 50-100 units before kicking off the Bangalore facility. Scania intends to sell about 2,000 trucks and 1,000 buses per year in the Indian market within the next five years.

Mumbai-based L&T has established Scania's truck and services and has helped developed a close partnership with customers in the mining industry. L&T currently operates about 10 service workshops at various mining sites.

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