Volkswagen, more often in the news for its cars, saw its relatively less-publicised truck business hit the headlines last week.

The German automaker is rumoured to be zeroing in on a stake in Navistar of the US which, incidentally, has a presence in India through a joint venture with Mahindra & Mahindra. Neither VW nor Navistar commented on these reports though industry experts believe the chances of this happening are ‘extremely high’.

VW’s other high profile truck brands in its kitty are MAN and Scania which are also gearing up for a bigger play in India. The former had a joint venture with Force Motors for some years before deciding to buy out its partner’s stake and go on its own.

Scania’s India presence was largely confined to a distribution agreement with Larsen & Toubro but the Swedish truckmaker has since decided to carve out its own agenda here.

As for Mahindra Navistar, it is still a recent entrant in the competitive commercial vehicle arena and has just about got its retail roadmap in order. It will be interesting to see how this will be impacted in the event VW gets a foothold in Navistar.

While each of these brands, be it MAN, Scania or (possibly) Navistar, will retain their original brand identities as part of the front-end strategy, there will be tremendous synergies at the back-end.

This could include common sourcing of parts, pooling R&D skills and so on. This will be imperative at a time when global automakers are grappling with the challenge of high costs and diminishing markets, especially in the West.

Indian market

And while emerging economies like India are still affordable in comparison, their much touted cost advantage is rapidly becoming a thing of the past. Commodity prices are hurting everyone while labour costs have also seen a significant rise across the BRIC economies.

This fact will not be lost on diversified groups like VW which already has synergies in its India car operations with Skoda and Audi. It will apply the same business model to its truck business where MAN, Scania (and Navistar?) will join hands in specific areas.

Local players

The bigger challenge will, of course, come from established local players such as Tata Motors and Ashok Leyland as well as aggressive multinationals such as Daimler and Volvo. Foton of China could also emerge another interesting rival though there has been little news on plans.

So far, the tug-of-war has not kicked off yet though industry veterans are betting on a ‘Daimler onslaught’ in the near term. To MNCs, India is particularly attractive since it is poised to become the largest bus market in the world. “This is a bonanza at a time when Europe is sinking and the only option left for European companies are the BRIC economies,” an industry veteran said.