MAN will look at a bigger India play in trucks and buses after buying out Force Motors' stake in the joint venture. This is inevitable with the current downtrend in Europe, which will see the BRIC (Brazil, Russia, India and China) economies take centre-stage for MAN in the coming years.
The acquisition of Force Motors's equity, coincidentally, comes barely a fortnight after Volkswagen assumed majority control in MAN worldwide with a 53.71 per cent stake. Its holding in Swedish truck maker Scania (held by MAN) was also enhanced as a result to 62.6 per cent.
VW, MAN, Scania
Scania, incidentally, has already made known its intent to grow its India presence, which means that VW will look at greater integration of its commercial vehicle operations here. Whether this will include synergies on sourcing with its car business remains to be seen though this is not likely.
From MAN's point of view, being part of VW will mean joint efforts in R&D (along with Scania) and sharing growth experiences in emerging economies. This cooperation between the three entities is expected to result in synergies of at least €200 million annually, largely in the procurement space.
Going forward, the trio could join hands in areas such as production and R&D. However, each of these brands will retain its exclusive identity, which is the case with other VW group companies in India like Audi and Skoda.
MAN is already a big player in Brazil where it is the leader in the five tonne plus segment. The competitors here include Daimler, Ford, Volvo, Iveco and Scania. In Russia, it has a new plant in St Petersburg and an assembly unit in Uzbekistan. It sells heavy trucks in China under the SITRAK brand.
India will be tough
As for India, observers believe MAN will have its task cut out especially when there are tough rivals to contend with. Apart from established players such as the Tatas and Ashok Leyland, others like Navistar (in a partnership with Mahindras), Volvo (with Eicher) and Asia MotorWorks are keen on grabbing a larger share of the truck pie.
“The big one to watch out for will be Daimler,” an auto sector executive told Business Line . The company is drawing up big plans for its trucks which will be sold under the ‘BharatBenz' brand. As in the case of MAN, Daimler started off with a local partner, the Munjals, but is now on its own with operations near Chennai.
“The going will not be easy for MAN but it will not be in any tearing hurry either given the market potential in India. By the end of the day, its top priority would be to build a brand for its trucks and buses,” the executive added.