Volkswagen companies may join forces to make a mark in commercial vehicles

Volkswagen companies Scania and MAN look to the sharing of chassis, parts, engines and bus-body facility

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

The Sweden-based truck and bus manufacturing company, owned by Europe's largest automobile maker Volkswagen, aims to join hands with another Volkswgen Group company, MAN Trucks India, 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 companies operate in the premium category of the truck and bus market, through a proposed collaboration and joint work on research and development, they aim to move to the mass market, where Indian companies operate.

Both look to the sharing of chassis, components, engines and bus-body facility, said an executive of Scania India. Volkswagen, in India and abroad, employs the same method among 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, we are talking (to MAN); we don’t have concrete projects yet. However, in the sales and services, we regard MAN as a competitor".

Indian truck and buses producers, traditionally led by Tata Motors 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 per cent) and Ashok Leyland (25 per cent) command 80 per cent 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.