The final verdict is not out yet but the India innings is nearly over for MAN Trucks.

“The Board of MAN Truck & Bus AG has decided to stop all on-going projects in India. The Management Team at MAN Trucks in India has been asked to review the situation and present its proposals to the Board for future steps. The team is currently reviewing the same,” says a company spokesperson.

Going by this statement, there is no indication that MAN is set to shut shop immediately. Consequently, there could be some cause for hope but the outlook is distinctly grim. The fact that all ongoing projects have been stopped is a clear indication that things are not looking good.

If MAN decides that enough is enough and shuts shop, it will be yet another closure to add to the growing list of exits from the Indian automotive arena. The more recent have been Eicher Polaris, which brought the shutters down on the Multix personal utility vehicle in March, and General Motors, which stopped retailing cars in India last year.

In the case of MAN, of course, the last word is not out yet which perhaps would give a small ray of hope but that seems very unlikely. Headquarters is clearly not inclined to putting in more money into the operations here which means trucks will continue to be made till there is enough working capital.

In the process, it remains to be seen how the MAN supply chain system, comprising its dealers and ancillary suppliers, copes in this difficult period. Customers will also need to be assured of availability of parts in the near future while the most difficult stakeholders to deal with will be the company’s employees. Assuaging their concerns is not going to be the easiest of tasks.

It is impossible to say how long MAN will continue to keep the show going though it is a safe bet to say that the outer limit will be April 2020. This is the time Bharat Stage VI emission norms become mandatory, which means that the era of BS IV will come to an end. Automakers are making huge investments in new technology to be able to cope with this transition. They are also preparing themselves for a lull in demand since the end products will become more expensive. Whether MAN will change its mind by then and still see hope in a new emissions era post 2020 is what the diehard optimists will hope for.

Missing out on action

What could have prompted the German truck and busmaker to go in for this move and order a freeze on all projects? After all, India offers tremendous potential which explains why the likes of Daimler are so bullish about business prospects here.

Yet, it is not the easiest of markets to do business in, given that the Big 2 — Tata Motors and Ashok Leyland — take up a large chunk of the pie while others like Mahindra & Mahindra, VE Commercial Vehicles (the Volvo-Eicher joint venture) and BharatBenz are also pulling out all the stops to stay ahead. In this backdrop, MAN remains a marginal player even while its top management has been reiterating in recent times that it is looking at long-term growth prospects. The company has also been here for over a decade now, which means it is not entirely unfamiliar with the terrain. Yet, it has still not made a mark even while German counterpart, Daimler, has been hugely aggressive with BharatBenz.

According to an industry source, MAN did “precious little” in its early years of the joint venture with Force Motors. “There was really no signal of intent to make a big difference and stand out,” he says. MAN subsequently went on its own, which seemed to indicate that it was now going to put its house in order and start all over again. Its leadership team also reflected this optimism even while conceding that India was not the easiest of markets to operate in.

Hope and optimism stemmed from the huge potential in the future which would see better infrastructure, a new set of fleet owners, greater attention to safety and so on. In this new scenario, MAN would become more relevant as a brand and leverage opportunities a lot better.

All these positive changes augured well for the company and the management team rightly inferred that it made sense to hang in and fight it out for a place in the sun. The abrupt volte-face now also causes observers to wonder if India is just too difficult a place to do business in. “There is hardly any consistency in policy. Everyone remembers the chaos that resulted last year while moving to BS IV. Now, there is added pressure on BS VI with the kind of timeframe that even advanced countries have not attempted,” says an executive.

He then points out the even more recent instance of the Centre prescribing new loading norms without even consulting commercial vehicle makers. While the move has left stakeholders befuddled and anxious, it only seems to reaffirm that the goalpost in India keeps shifting.

Is this what caused MAN to slam the brakes on operations here and decide that further investments did not make any sense? Perhaps, there were other markets which needed more attention and promised plenty. In comparison, the wait would have been a lot longer in India and not worth anyone’s while.

No silver lining?

MAN, of course, has not cited any reasons yet, though it is logical to infer that it just does not see the proverbial silver lining in the cloud in this part of the world. If this were true, it is a pity because there are many others who are willing to throw down the gauntlet and prove a point.

Not everyone agrees that the country’s policies, often cited as a deterrent by multinationals, are to be blamed. As a top official says, it is time for automakers in India to be ahead of the curve and show the world that it means business.

“Why should cars sold in India have lower safety and emission standards compared to other countries? At least now, with BS VI and other safety regulations, we can tell the world that India is as good as the rest and even more,” he says.

It is a view that finds resonance with other companies too, especially when there are embarrassing statistics that showcase the high levels of road fatalities as well as foul air in global cities like Delhi. To that extent, nobody can complain about investing big bucks in BS VI even if the returns are going to be slow in coming.

If and when MAN finally decides to bid adieu and make it official, it will not make much of a difference in the heavy duty truck space, given that it is still a marginal player in India. A bigger area of concern is the impact this move could have on stakeholders who are part of its ecosystem — ranging from its employees and suppliers to dealers and customers.

Plant closures are painful and to those involved with the Peugeot saga two decades earlier, the memories are still fresh. It was a diktat from Paris in end-1997 that brought things to an abrupt end. There have been other closures like Daewoo and Hindustan Motors, which again left a trail of unhappiness. Whether MAN will change its mind about India is the million-dollar question.

comment COMMENT NOW