Six years after opening shop in India, Daimler India Commercial Vehicles (DICV) has announced that it has broken even on its investment in truck manufacturing, for the Indian market.
The company began operations in 2012, at Chennai’s automotive corridor, Oragadam. It had announced, then, that it would invest Rs 4,000 crore in manufacturing operations.
“We have worked aggressively in bringing cost discipline within the company, which means we reduced variable and fixed costs, and the result is for you to see,” said newly appointed MD and CEO of DICV, Satyakam Arya.
The announcement comes on the back of Daimler recording its best-ever sales numbers in India, in 2018, for trucks. The company announced that its domestic sale of trucks had increased by 35 percent last year (22,532 units versus 16,717 units in 2017) while its exports grew by 8 percent. Daimler India also exported over 7,000 trucks for the first time in a calendar year — it exported 7,054 trucks last year, against 6,553 units in 2017. Falling Market Share, A Concern? While these numbers look good, the company has reportedly lost out on market share in the medium-and-heavy-vehicles space. The company has reportedly seen its market share drop to 7.1 percent in 2018, from 9 percent the previous year. But Arya doesn’t seem too perturbed. “We do not drive our business by market share,” he said, “We do it only on the basis of profitable growth, which we have been doing in the last six years.”
Analysts say that the fall in market share could be a result of the company’s no-discounts policy, which has resulted in competitors enjoying better volumes, which Daimler India has lost out. ‘Only Marginal Growth In 2019’ But if volume pressure is one issue that Daimler India is contending with, a bleak 2019 for the commercial vehicles segment is another bugbear. While the last quarter has been less than ideal for the CV segment, Arya said the next ten months could continue to pose challenges.
“We expect the slowdown to continue in the first quarter (calendar year) of 2019, while the second quarter will be election time, when people normally postpone purchase decisions,” he said. “So, while we expect the first half of the year to be slow, the third and fourth quarters will see a pre-buy effect for BS-VI kicking in. My expectation is that 2019 will be a flat year with only a small amount of growth, at best.”
DICV’s plant in Oragadam has a production capacity of 72,000 units, with the option of enhancing capacity by working around shift schedule. “Reviewing capacity is a continuous exercise, depending on the demand we have,” said Arya, “If we need more capacity we will start work well in time.”
