Eicher Trucks & Buses to set up a second manufacturing plant to meet demand

Volvo Eicher Commercial Vehicle, a joint venture between Volvo and Eicher Motors, will be setting up a new green field plant with its current facility at Pithampur in Madhya Pradesh running at optimal capacity. Company's board will take a decision on the second plant in its board meeting in the next couple of months, said Vinod Aggarwal, managing director at VECV said at a press meet in Mumbai on the sidelines of launch of two new heavy duty trucks, Eicher Pro 6049 and Eicher Pro 6041 in the 49 ton and 41 ton categories respectively.

The new facility, the location of which is yet to be ascertained, will have an annual capacity of 50,000 vehicles. The current capacity at Pithampur is around 7000 to 7500 units and we can go up to 8000. “We did 66000 units last fiscal and should be able to manage this year but we need a new plant,” said Aggarwal who expects the buoyancy in the commercial vehicle market to continue  this year and in the forthcoming years on back of a stricter implementation of an overloading ban, strong economic growth and faster migration to higher tonnage vehicles. 

In a first, last year, the National Highway Authority of India as part of a government plan to monetize publicly funded, operational national highways through the toll-operate-transfer (ToT) model, auctioned the rights to manage 648 kilometres of highway to the Macquarie Group, a Sydney-based infrastructure asset management company.  The move to get private firms to manage the highway has led to a better enforcement of the overloading regulation as private companies levy a heavy penalty which is ten times the toll one pays. On trunk routes Delhi to Mumbai, if the truck is overloaded, the penalty could be as high as Rs1.2 lakh. 

A swift migration to vehicles with higher payload has also boded well said Aggarwal. The market for 37 tonne trucks has gone up three times—from 25000 units in 2016-17 to 75000 units in 2017-18.  Similarly the tractor trailer market has gone up from 40,000 to 70,000 in the same period.

“Last year it was a year of good growth and we expect it to be the same this year and the years ahead as the industry’s total volumes is still at a very low level,” said Aggarwal adding that company’s short term target is to move up from 1000 units of heavy duty trucks per month to 1500, he said adding that 41 and 49 tonne launched by the company today will be critical in meeting the targets. This year could also be a new peak for the light and medium duty trucks where Eicher has a strong play.  His optimism on the overall robustness in demand stems from the economic growth. “If the real GDP growth is good, it will need that much more trucks to serve the needs,” he said.  

Truck and bus sales in India rose at a brisk pace in the financial year that ended March 31 zooming to 856,453 units  from 714,082 units last year according to Society of Indian Automobile Manufacturers. It crossed the earlier peak of 809,499 units sold in fiscal 2011-12.