Legacy players are preventing Volvo-Eicher from expanding share in CV market: Eicher Motors MD
Heavy discounts by bigger players in the commercial vehicle segment is leading to a loss in market share of the Volvo-Eicher joint venture as it is forced to forgo bulk deals in segments where the company had secured a strong foothold over the years.
Despite retail demand being strong, commercial vehicle companies are relying on discounts to clinch bulk deals. Though every truck and bus making company is offering discounts, each one blames the other for offering them.
Speaking to reporters on the sidelines of announcing the March quarter results, Eicher Motors managing director and chief executive, Siddhartha Lal, said, “Severe competition and heavy discounting by legacy players are preventing new players like VECV from strengthening in the market. We have had a marginal decline in Light and Medium duty trucks but have grown slightly in heavy duty trucks."
Though Lal did not name any truck and bus maker during the interaction by stating ‘legacy players’, he may have pointed at two of the strongest brands — Tata Motors and Ashok Leyland — who control 80 per cent of the Indian market.
The commercial vehicle market grew by 20 per cent last financial year to 8.56 lakh from 7.14 lakh units sold in 2016-17, as per data supplied by the Society of Indian Automobile Manufacturers. VE Commercial Vehicles, the Volvo-Eicher joint venture company, recorded a lower growth of 13 per cent in sales to 55,876 units as against 49,406 units sold in 2016-17.
“Lots of competitors target us since we are strong in the light and medium duty truck segment. In commercial vehicle business, every deal we are looking at profitability on one hand and sales on the other. So you take a few and some you don’t, but we are there on every deal. We are willing to forgo a few deals which we think are too low for us to take," added Lal.
Notwithstanding, the Delhi-based company has lined up an investment of Rs 500 crore for this financial year. This will be spent largely on new products, BS-VI technology development and expansion of production capacities, according to Lal.