Reports in the Economic Times clarify in part Volvo’s plans for its Indian operations. India is to become a sourcing hub for its world-wide operations, and, as a result, Volvo plans to increase its Indian R&D and engineering design activities, IT services and auto components sourcing. Last year, the Swedish OEM sourced €70 / $91.97 / £46.95 from India.
Initially, Volvo will increase the headcount at its engineering design office. "We currently employ 80 engineers at our engineering design office. We plan to employ another 100 this year. This office looks at product development primarily for the Asian market," said Eric Leblanc, managing director, Volvo India. In addition, the Hoskote plant will migrate to double shift production, allowing for output to be doubled to 2400 units per year. Volvo currently has sales of around 600 units per year within India. This move will facilitate the supply of Volvo product into Asian markets – such as Vietnam and Indonesia from Indian as opposed to European facilities. Hoskote already supplies Volvo customers in South Korea and Bangladesh.
Volvo claims this move is as much about freeing up capacity within its existing EU facilities as it is about developing a strong Indian manufacturing base. Given the somewhat parlous state of the EU heavy truck market post-Euro 4, we find this assertion to be rather odd. Intriguingly, other reports suggest that Volvo will – in time – export to China from India, giving further reason to believe that the relationship between Gothenburg and CNHTC is becoming increasingly fractious.

More mystery surrounds the exact nature of the relationship between Tata and Iveco as a result of this piece in the Times of India. The report, which suggests that Tata is to use Renault’s Trafic van platform in order to produce a three tonne passenger / commercial range, allowing it to plug the gap between its recently launched Ace one tonne product and the heavier duty 407 van.

The three-way alliance between SAIC, Tata and Fiat becomes yet more confused. Leaving aside passenger car business for a moment, it would appear that Iveco and SAIC are now well wedded, but the more obvious Iveco – Tata relationship is far from consummated. Indeed, with the exception of a joint strategy in Latin America – in itself a strange move given Iveco’s existing reckonable business in both Brazil and Argentina – there appears to be no obvious move towards consolidating the efforts of Tata – one of the world’s biggest CV manufacturers and indigenous to one of the world’s biggest potential CV markets – and Iveco – in itself a not unreckonable force in the CV business.

Post Ashok Leyland, Iveco has no presence within India at the moment. It – and any other CV manufacturer – probably needs one. So why the absence?

Is Iveco’s future as a part of the Fiat Group still uncertain? We can think of no other reason for the delay in sorting a Tata-Fiat relationship out. Certainly, there are one or two other European CV OEMs sniffing around a piece of the Indian giant – DaimlerChrysler for one – and so you’d have thought that Turin would have been keen to nail this deal down. That it isn’t suggests – possibly – that it might be keen to have an unencumbered Iveco ready to take to market at some point in the not too distant future.

Interesting report here about KaMAZ and its plans for India. This is the market to be in at the moment, and it’ll be interesting to see just how the Russian OEM gets on against the indigenous giants – Tata and Ashok – and the newly keen European OEMs – including Volvo, MB, Scania and MAN. Add to this heady mix the Chinese - through Asia Motor Works – and it all adds up to seemingly interesting times ahead.

Interesting to see here that GAZ has signed an agreement with Ural India. What could this be for, we wonder. UralAZ has an existing relationship with Iveco, and GAZ wants to take over the world.

LDV for the Indian market? Certainly a thought.

Good to see that the Cummins Inc Board of Management is getting out and about a bit, and is currently enjoying some R&R in India, from which many good things are predicted to emerge, and where the US Engine builder already has a considerable presence.

One does hope that the Economist was not one of the proffered publications on the plane from Indiana to Mumbai. The most recent issue has a somewhat pessimistic article contained within its covers that points to the imminent overheating of the Indian economy.

Oh well.

The seemingly on-off relationship between Tata Commercial Vehicles and Iveco – a potentially arranged marriage that could come about as a result of the alliance struck between Tata and Fiat - the respective owners of the two marques – is examined here.

At one level, the much-trailed possibility of a Fiat-Tata LCV JV has now been confirmed. Fiat will build a Tata pick-up truck at its Cordoba, Argentina plant. This vehicle will be retailed in selected Latin American markets, as well as through Fiat dealerships in some European countries.

But the broader picture is still very cloudy. Our view remains that any further collaboration seems at best conditional on a vast amount of things, most of which appear to be somewhat intangible. The Forbes article speaks of MOUs and study groups, and places an apparently open-ended timescale on any possible deal. Indeed, Tata's recent decision to cosy up with Renault seems only to confirm an ambivalence at least on the part of the Indian side.

But this reportsuggests that Iveco is being used by Tata as a replacement for that which was promised by Daewoo - acquired by Tata a couple of years ago - and to date, a far from stellar contributor to the Indian design effort. Make your own mind up.

We do not feel that Iveco looks comfortable with Tata. The original deal between the principles makes a lot of sense from the perspective of sourcing and cost-effectiveness in terms of car manufacture, but there seems to be some danger of Iveco being shoehorned into this. We see this as inappropriate.

Hence the current stance: there is no deal, but there might be. On the other hand, so there might not be. Only time will tell. But, with Iveco now a key player in the next round of OEM consolidation, it’s arguable if time is actually a commodity available to either side. Of course, a MOU does serve as a spoiler, but not one likely to be ultimately effective should Fiat be offered a decent sum for its truck business.

In truth, whilst Iveco would doubtlessly be a technology leader in any deal with Tata, it would be a very much junior partner in terms of scale. We come back to the elegance of an Iveco-MAN-Navistar alliance, into which input from Tata – and also Iveco’s Chinese partner Yuejin – would make a lot of sense.

We’ve already discussed the fate of Iveco’s previously-held 15 per cent piece of Ashok Leyland.

Volvo had been viewed as a front runner in this race, with Scania a close second. No longer – it seems that talks with Volvo have broken down for the same reason as the Scania discussions went nowhere: both Swedish OEMs wanted management control, and the Hinduja boyz – the owners of Ashok – were having none of it. A fact which presumably precludes any DC interest.

We assume that this derailment has caused a bell or two to ring in Bellevue, Washington. Paccar – as discussed previously here – is rumoured to have taken a look at Ashok before, and we rather like the look of the fit. Indeed, there’s some irony here: if DAF’s management had been slightly more long-sighted a couple of decades ago and acquired a piece of the Indian OEM as part of the whole Leyland debacle, then this situation would not have arisen today. As it is, we rate an Ashok-Paccar deal as a good solution – albeit one now 20 years overdue.

Asia Motor Works - a newcomer to the Indian market - wants a ten per cent piece of the pie, according to this article. We believe that AMW has Chinese money behind it, so anything's possible.

Here's some happy news for Cummins. For the third year in succession, it has seen turnover in its Chinese business top $1 billion. According to the report, the US engine builder now makes 50 per cent of its money away from its domestic market - probably a good thing given the current state of the NAFTA Truck business - with India and Russia coming second and third to China in terms of value.

How does Cummins celebrate? It buys out partner Tata's stake in the Tata Holset JV. Does this mean Tata is looking elsewhere for engine assistance?

Maybe the fog has just lifted a bit in terms of the Iveco-Tata relationship.

One of the stranger comments to come from Iveco executives during today's launch of the new Stralis was the assertion that "We didn't need to do this."

By 2012, Ashok Leyland aims to generate 20 per cent of its revenue from exports and international operations. This increase - current export earnings are eight per cent - could come through "exports, possible acquisitions and an expansion of our global manufacturing footprint", Vice Chairman Dheeraj Hinduja was quoted as saying by Reuters, with South Africa and "advanced markets outside the United States, Japan and Europe", being key targets.

Volvo's only 49 tonne competitor in India - Asia Motor Works - is to take the fight to the Swedes on price. Following a Supreme Court ruling in 2005, which finally put an end to overloading - or has certainly reduced any defence against the same - the 49 tonne market is potentially a high growth one.

AMW's 49-tonne tractor-trailer uses a ZF 9-speed gearbox, a Cummins 235hp engine, Meritor axles and Valeo clutch. Its gross combination weight allows a 36 tonne payload.

Here is news that DC is thinking - apparently seriously - about establishing a truck plant in India. It has - according to the report - earmarked a 15 acre site near Pune - coincidentally home to Tata.

"We haven't taken a decision yet, but there is a proposal to manufacture trucks in India. A decision on this would be taken shortly," a company official said.

Does this mean that DC has given up attempting to take either a piece of Ashok Leyland or a large lump of Eicher?

Some bus news.

Tata is to buy out the remaining 79 per cent of Spanish bus builder Hispano Carrocera for an undisclosed amount. The Indian OEM acquired a 21 per cent piece of the Spanish company in 2005, and is now exercising its option - which had another three years to run - to take on the rest.

We reported yesterday the rumour that DaimlerChrysler was considering going it alone in the Indian market by establishing a new truck plant at Pune, and this report lends some credence to the gossip.

It seems that the negotiations with Eicher have come to nothing - but quite what DC will do with its close to four per cent stake in the Indian OEM remains to be seen. This isn't the first time that Euro-Indian negotiations have stumbled as a result of arguments over management control - back in February we reported the demise of Volvo's ambition with regards to Ashok Leyland.

Of course, a standalone DC operation in India would cost more than a JV operation, but, ultimately, could allow the German OEM to develop business in a manner of its own choosing - we assume that components coming back to Europe is all part of the scheme.

At present, only the Actros range is sold in India, but we see some potential for the MD Atego and LD Sprinter ranges. Moreover, tropicalised versions of the same would be marketable throughout the rest of Asia as well. Of course, Mercedes-Benz already produces the Accelo in Brazil, and this would seem like a no-brainer for the Indian market.

According to this report, Tata is considering building a new CV plant in India.

The decision has been prompted by the significant growth it has witnessed in the Indian CV market over the past couple of years: in 2005-06, Tata's CV business grew by 13.1 per cent. In the first 11 months of fiscal 2006-07, cumulative sales of Indian CV sales stood at 2,68,453 units -- a 43 per cent increase on the previous year.

There is an interesting article in the Indian press this morning in which the Medium and Heavy Duty truck demand cycles are discussed.

We're not going to repeat it all here, but, in essence, there still seems to be sufficient demand momentum to maintain double digit demand for trucks over the next couple of years. The imposition of VAT and the Indian Supreme Court's dim view of overloading are both cited as factors in this.

And so the Indian market - which traditionally cycles in four-year periods - appears to have reshaped itself. Historical analysis would have pointed to a downturn during the past fiscal year: Indian numbers are calculated on an April - April basis, and so FY2005-2006 should have proved awkward. It didn't, suggesting that the Indian market is swapping one boom for another, without an intervening period of bust.

But, going back to the historical analysis for a moment, FY2009 - 2010 should prove to be bad. What is difficult to assess is how bad. Some supply problems mean that not all Indian truck buyers have managed to buy those trucks as yet. However, there will come a point at which this demand lag will end.

What happens then? Given the attention now being paid to the Indian market by the European OEMs: DaimlerChrsyler, MAN, Volvo, Scania - and, we believe - PACAAR - does this means that their major investments in India will bear fruit just at the start of a downturn? Intriguing - especially as both Tata and Ashok Leyland are on record as saying that it is export and foreign earnings as much as domestic growth that has got their attention.

More news on ArvinMeritor's global ambition is here.

Not only is it looking to more than double its procurement from India - spent $100 million there last year and is likely to scale that figure up to $250 million this year - but it is also planning to double the headcount at its Bangalore-based R&D facility.

BTW - the funding for this global expansion will come in part from the sale of ArvinMeritor's emissions control businessto One Equity Partners. That sale has now been approved by Federal antitrust regulators.

News here of Tata's March sales, and also some year-to-date numbers: the Indian market calculates on an April to April basis, so these represent eleven months of 2006-2007.

Tata's domestic sales of Commercial Vehicles (CV) in March were up 13 per cent at 30,720 vehicles as against 27,289 vehicles in March last year. Medium and Heavy Commercial Vehicles (M&HCV) sales stood at 17,673 units, up eight per cent over March last year. LCV sales were up 19 per cent at 13,047 units.

Cumulative CV sales in the domestic market for the fiscal year 2006-2007 were up 39 per cent at 299,173 units. Year-to-date M&HCV sales were 173,381 units, while LCV sales for the period were 125,792 units.

There's an interesting piece in Cargonews Asia today that details the efforts being made by the Japanese OEMs to stake out a piece of the Indian auto business, in particular, the huge investments being made to ensure quick turnaround vehicle shipping terminals.

Notably, the piece quotes Sontosh Mohan Dev, the Indian Heavy Industries minister, who says: "India is emerging as the destination of choice in Asia for the design and manufacture of automobiles and automotive components.'' Annual Indian automotive sales currently total $34 billion will rise to $145 billion by 2016.

Two Indian truck manufacturers have reported March sales today. Eicher - once thought to be a potential DaimlerChrysler partner - has seen its sales soar by 20 per cent, whilst Ashok Leyland - once a friend of Iveco, and which recently rejected both Volvo and Scania as suitors - has seen domestic sales dip, but exports rocket.

Eicher's March CV sales stood at 3,730 units, meaning that its 2006-07 financial year performance now stands at 28,077 units, a growth of 19 per cent over the previous financial year. Significantly, it sold 831 units in the plus 16 tonne heavy vehicle segment, a market sector that now seems to be gathering a lot of momentum.

Ashok Leyland, meantime, recorded a roughly two per cent fall in domestic sales during March, shifting 8,444 units as opposed to the 8577 units this time last year. However, its export business saw a 22 per cent rise, with 598 units being shipped against the 490 units of March 2006.

Ashok Leyland's year-to-date figures are equally impressive. For YTD March 31st - ie 11 months into the FY 2006-07 accounting period - the company's total sales grew 35 per cent at 83,101 units compared to 61,655 units in the previous year. Exports during the year were up 23 per cent at 6,025 units, in line with its previously reported aims.

But is Ashok Leyland still talking with Paccar?

And so the fog begins to clear. Tata will piggyback onto Iveco's distribution network in order to sell its heavier range within the emerging markets, whilst Iveco will bring its Daily van to India. Meaning that, if the PACCAR or Navistar deal comes off, then Iveco is selling the Daily in just about every world market.

Iveco also gets some good volume through what appears to be a solus deal ensuring that the Cursor engine is the de facto choice for Tata's heavy truck range.

All round, a rather nice deal.

This interview from Reuters underlines the importance that AB Volvo attaches to its Asian business.

It aims to increase its Chinese truck sales by 30 per cent in 2007; in 2006, it sold 1173 units in China, up 25 per cent on its 2005 figures. The Chinese market is expected to hit 340,000 units this year.

In order to achieve this, AB Volvo has to sort out the fiasco that is its JV with CNHTC. It seems to be angling for a bit of Dongfeng through its recent acquisition of Nissan Diesel, but the CNHTC non-deal could prove to be a real bar to progress. And, although the Chinese economy is still growing apace, it is very much export-driven, and the coming downturn in the US may put a crimp on future growth. Moreover, Sino-US trade relations are now getting somewhat frosty, a fact that does little to fill one with optimism.

India also gets a honourable mention; we've written in the past about Volvo's plans for its Hoskote plant, and we assume that it is now resigned to going it alone there.

Of course, any future growth will require investment, and it's very difficult to assess just how much the US downturn will cost AB Volvo. There is, after all, only one pot of money at the end of the day; how much of that will have to be spent propping up VTNA remains to be seen.

An interesting tale here about a new Medium Commercial Vehicle in the Ashok Leyland stable.

Whilst here is talk of another Ashok Leyland production plant.

There's an interesting tale in the Indian press that concerns local truck operators' plans to up freight rates as a result of interest rate increases that have increased cost-of-ownership by almost 40 per cent.

Truck companies are planning to increase freight rates by 10-15 per cent after the prevailing interest rate rose from 10 to 15 per cent a few months ago. Over 98 per cent of Indian commercial vehicles are financed.

Interesting interview here with Anirudh Bhuwalka, the man behind Asia Motorworks - AMW - in India.

Bhuwalka has just announced the launch of Asia MotorWorks' (AMW's) 25-49 tonne range on Indian roads, and, despite the fact that he's going up against some rather stiff competition - Volvo, DC, Tata et al - he ain't scared.

Not least because he seems to have worked a bit of a flanker as far as tax concessions from the Gujarat government for locating the AMW plant in Bhuj.

AMW has already put 900 assembled trucks on the road and hopes to sell 5,000 heavy commercial vehicles by 2008. According to the piece, Bhuwalka is hoping for a 90 per cent piece of the 49-tonne market. Which, given that he only started in 2002, does seem a little bit ambitious. However, this report seesm to look quite favourably on the prospects for the Indian OEMs during the enxt fiscal quarter.

Anyway, here's a pic of the AMW product. Any Chinese DNA - or money - in there we ask?

Confirmation that Isuzu is taking the North American market very seriously indeed.

As we reported last week, it is returning to the US as a truck manufacturer, having purchased a large lump of land in Alabama.

Now here's news of its intentions to establish a Canadian distribution operation, complete with dealerships, and a goal of 2000 unit sales by 2010.

And just for good measure, here's something about Isuzu and India - don't know what weight range, but notable nevertheless.

This Reuters interview doesn't give much away in terms of fact - save that the Indian leviathan is building an auto components plant in Nanjing - not a million miles away from new ally Iveco's existing Naveco operation, but it does point to an interesting shift in emphasis.

The west tends to regard China and India as equal runners in the low cost sourcing race. But India also boasts a large number of highly skill engineers and designers, and, just as importantly, a highly motivated young workforce.

Put that lot together with Chinese cost advantage, and you get somewhere good pretty quickly.

Here's some interesting news c/o Reuters.

Ashok Leyland has acquired Defiance Testing and Engineering Services Inc, a not insignificant player in the vehicle testing biz, from GenTek.

There's not a great deal of significance in an Indian company buying a non-Indian company at present - in fact, by our calculations, the Indian's are investing more overseas at present than the overseas is investing in India.

But, the fact that Ashok Leyland is now investing down the production chain - think components manufacturers and now testing facilities, rather suggests that it is going it very much alone.

A good piece here in India's Business Standard newspaper indicating that a plateau may have been reached in the previously buoyant Indian truck market.

True, there is still strong demand for trucks, but, increasingly, finance costs and year-on-year raw material cost increases are beginning to have a negative impact.

Cause for thought here, with the news that Tata, India's largest CV OEM, took a 14 per cent knock in April in terms of its medium and heavy CV business.

Conversely, Tata's LCV business grew by 22 per cent during the month, and CV exports were also in the black. Passenger car business rocketed by 26 per cent.

Does this mean that the steam is now coming out of the Indian market? We'd expect a downturn to be led by heavy CV's, and this sector is down. That passenger car and LCV remain buoyant suggests a time lag effect.

One to keep an eye on, we think.

Confirmation here of our previous view of the Indian CV market.

Whilst the sub 3.5 tonne and the heavy sectors are both booming, it looks like the MCV sector is crapping right out.

We tend to forget that International has a JV with Mahindra & Mahindra, the Indian OEM.

Called Mahindra International, it has - until now - given the appearance of being all mouth and trousers. But here is some concrete news; it seems that the JV's first progeny will be a 25 tonne truck, with a launch slated by the end of 2007.

The report makes reference to components sourcing, quoting an un-named spokesperson as saying that different vendors are being approached. We wonder quite where MAN may fit into this. It has a strong relationship with International in the US - vid the MaxxForce engine range - but also an infant JV with Force Motors in India - capable of around 20,000 units per year, based upon old MAN products.

Conflict of interest?

There is an interesting piece in the Wall Street Journal that talks of a future post-Chrysler for the Daimler operation.

This bit catches the eye: "The deal to relinquish 80.1% of Chrysler Group to private-equity firm Cerberus Capital Management LP -- approved yesterday by DaimlerChrysler's supervisory board, the equivalent of a U.S. company's board of directors -- will allow DaimlerChrysler to focus on strengthening its luxury Mercedes brand and on boosting its commercial-truck business. Mr. Zetsche said the company may seek deals to expand its truck business, known as the Truck Group, especially in the U.S. or India."

We are uncertain as to how Daimler might expand its US truck business through acquisition without bumping into a number of anti-trust issues. As far as India is concerned, we've made reference in the past to the then DaimlerChrysler aim of taking a piece of Eicher, maybe some of AshokLeyland, or simply establishing its own standalone truck operation therein.

One thing we can't quite work out at present is the likely direction for the Sprinter in the US. It is marketed both by Dodge and Freightliner, built from CKD kits by the latter, but sold mostly by the former.

We have to assume that the 19 per cent of Chrysler retained by Daimler makes reference to products such as the Dodge Sprinter. As such, buying into a Medium Duty OEM - such as taking on GM's apparently for sale MCV business - looks unlikely. But, the WSJ article makes reference to the recently acquired 24 per cent piece of Beiqi Foton - the Chinese OEM with a reckonable van business. A Daimler-branded Chinese low-cost MCV for NAFTA? Surely not.

So where is this additional US growth to come from?

There is some logic to be had in the notion of OEMs moving down the production scale and getting involved in transport. If, after all, a large slice of the costs accruing from the transport task involve the possession of the asset central to the same - to whit, the truck, then it makes a certain amount of sense for the manufacturer not just to manufacture the thing, but also to maintain, staff, fuel and ultimately dispose of it. The haulier's task would be his core competency - namely maximising vehicle utilisation.

This same theory was trotted out some years ago, when we had a rash of downstream M&A stuff involving OEMs buying transport providers. Volvo and BRS, Fiat and Fraikin etc.

But here is talk in India of a similar sort of shift. Volvo has applied to the Indian government to include "logistics, freight forwarding and transport" -- as well as allied areas like cargo handling and clearing, packing, warehousing and store keeping -- in its roster of domestic activities.

If we approach this from an emerged market perspective, then such a move would seem odd. It would, however, allow the Swedish OEM to spend more money, much to the presumed chagrin of Christer Gardell.

But India isn't Europe. Is there a market for a truck provider, as opposed to merely a truck producer there? As the Indian vehicle parc gets more complex, warranty issues raise their head. Moreover, buying a truck in India is becoming expensive. Buying use might provide an admirable compromise.

Worth keeping an eye on.

Let's draw breath for a moment, and have a look at the rumours surrounding both Navistar and GM and Navistar and Fiat.

Ashok Leyland is to establish a wholly-owned Used Vehicle sales operation in India. Called ALTRUX, the new operation will purchase and recondition used Ashok Leyland vehicles, which will then be marketed with a six-month warranty.

According to this article here.

Cummins India has reported Q1 figures that show net sales up by in excess of 30 per cent, and net profits up by over 21 per cent. Year on Year, the Indian operation has seen net sales up by in excess of 25 per cent.

Where next? We're just beginning to detect the first sign of a cooling off in the India CV market - the 49 tonne sector still looks to have a lot of growth potential left, but the MCV sector is beginning to look a bit tired.

Interesting report here concerning Tata's thinking as to a production facility in South Africa.

Much would seem to hinge on the outcome of a review of the South African Motor Industry Development Programme (MIDP), which incentivises local content and assembly, and which is expected to be completed by the end of June.

Further evidence here that the Indian CV market may be on the wane. Tata, India's biggest CV producer saw its May sales decline by six per cent to 20,675 units,

Medium and Heavy Commercial Vehicles (M&HCV) sales during May were down 17 per cent at 10,500 units while light commercial vehicle sales were up 10 per cent at 10,175 units.

Tata's cumulative domestic commercial vehicle sales for the fiscal - April-April - year fell by three per cent at 40,282 units while exports in the period grew five per cent at 8,340 units.

The Indian government has begun to impose a tighter monetary policy as a result of strong - some argue too strong - levels of domestic economic growth, and it's too soon to say as to whether Tata's figures reflect a short term reaction to increased borrowing costs, or a more fundamental change.

We must confess to be a little uncertain about this article, which posits that there will be a million hydrogen-powered vehicles running in India by 2020.

There appears to be a direct correlation between those who would promote the idea of a hydrogen economy and a marked absence of knowledge about just what that same development would entail. George W Bush provides a stellar example of this statistical elegance.

The fact is that there is no alternative to fossil-based fuels at present, and the costs implicit in developing the same are almost beyond calculation, and certainly beyond maintaining the sort of pump prices we are currently used to. Given that most - if not all - economic development over the past 100 years has been due to a ready supply of cheap fossil fuel, the likelihood of another fuel type taking over without a huge cost implication seems unlikely. And before the BioFuel shysters kick off, we'd include you in this category as well. A belief in hydrogen may be misplaced, but a belief in BioFuels is painfully naive.

Will there be a million hydrogen-powered vehicles in India in 13 years time? May well be. Will they be moving? Therein lies the question.

We remarked a couple of days ago that the Indian truck market is showing signs of cooling off.

This article suggests that this is in fact the case. Tata, India's biggest CV producer is both cutting production and may be laying off staff. Its May sales were down by six per cent.

But here is news that Ashok Leyland, India's second largest truck manufacturer, is going out into the markets with a view to raising $250 million for plant expansion both at its Ennore and Uttaranchal plants. Ashok Leyland's truck business dropped by 17 per cent in May, but its Bus division seems to be booming, meaning that aggregate sales were in fact up by three per cent last month. And here is news that Eicher's truck sales went up 16 per cent in May.

We have reported on Daimler(Chrysler's) intentions towards India in the past.

And here is a rather good article that brings us up to date.

What is going on in India?

May truck sales were down significantly. Whilst the CV sector as a whole saw a one per cent rise during the month, truck - as opposed to truck and bus sales were fairly horrible. Tata dropped 19 per cent in the Medium and heavy Duty Sector, whilst Ashok Leyland posted an 18 per cent decline.

This news concerning Scania's agreement to enter into a partnership with a Chinese bus bodybuilder may seem to be somewhat incidental.

But we think otherwise. Looking at Scania's approach to the two major emerging markets - India and China - one sees that it has adopted a low risk, low cost policy, and this seems to be very appropriate. Scania already has a sales operation for its heavy truck range in China, but these products are positioned at the premium end of the market, and there is no local partner involvement.

Both the Jiangsu Alfa Bus and the Larsen & Toubro Limited deal in India - and, for that matter, the agreement with Iranian bus producer Oghab - suggest a business model based around cautious, partnership-driven growth in the Emerging Markets and this seems entirely appropriate.

We're beginning to wonder about the notion of the global OEM; it seems that the world might not be quite ready for a business structured beyond a regional level. Scania's approach seems to offer many of the benefits of a global company, but with far fewer pitfalls.

Cummins has started to develop a new Fuel Systems plant in Wuhan, China, according to this report.

Although the site is the thirteenth Cummins operation in China, the Wuhan facility is significant in that it is the first Fuel Systems plant to be opened outside the US. Cummins - not least as a result of its XPI work with Scania - can probably justify a claim to technology leadership in this sector.

Interesting piece here concerning the indigenous Indian OEMs and their increased interest in the LCV market.

Our take on this is a simple one. The market is now polarising around the heavy and the light end, meaning, ultimately, that the MCV sector will be squeezed. But with the HCV sector now being impacted by the Indian government's fiscal policies, the LCV sector now looks to be the robust one.

Volvo's adventures in China have hardly been the stuff of a good night's sleep. The CNHTC disaster is yet to be resolved, and now the Swedish OEM has Dongfeng-Nissan Diesel to play with as well.

Hardly surprising then that it seems to be looking to use its Indian operation as a supply source for China. Never pick a fight that you can't win seems to be the moral of the story.

Rumour has it that Ashok Leyland is about to break ground on a truck bus plant in Moldova.

It'll be interesting to see quite where the output will end up.

Onetime DCX paramour and now resolutely independent (!) Indian OEM Eicher is looking to launch a four-axle light duty, a 16 tonne medium duty and a new bus model by the end of the fiscal year – March 2008 – according to this report.

“The idea is to have a complete range of product portfolio from the 5-tonne to 40-tonne vehicle by the end of the financial year,” CEO A. Ramasubramanian is quoted as saying.

South African Super Group is obviously taking its deal with Shaanxi very seriously, according to this report, which details plans for a new production line and a whole load of investment.

But our curiosity is awakened by the fact that 78 per cent of Super Group’s revenue accrues from providing transport services – it is one of South Africa’s largest 3PL providers.

So this is a deal between an OEM and an end user. Nothing strange in that, but, reading between the lines, it’s a deal that has been driven by the end user, rather cutting out any of the existing players in the South African market.

Given the growth of the mega-fleets worldwide – UPS, FedEX, Schneider, JBH, Willi Betz et al, can we draw any conclusions here? Let us suggest a situation in which huge providers of transport as a non-core business – big retailers with own account fleets for example – look around for similar partnerships with non-traditional equipment providers – from an EU / US perspective, for non- traditional read emerging markets.

Is this the way into the Triad for China, India and Russia?

Good piece here detailing Tata’s fears of a Chinese invasion of the Indian CV market. The upshot – the Indian OEM is spending $3 billion over the next three years in order to expand.

But, interestingly enough, of Fiat, there is no mention. Is Tata of a size to go it alone?

Mahindra International, the JV struck between US-owned OEM International and Mahindra & Mahindra has cropped up again, and the news is one of delay. Rather than knocking motors this year, it’s not going to bear fruit until 2009.

The reason given? Twofold: a delay in finalizing the plant location and a review of product development.

Yeah right. One would have assumed that the JV would know 1) what it was going to make and 2) where it was going to make it in 3) the year it was going to start.

Maybe Indian feet are cooling, as International’s parent – Navistar – becomes yet more of a takeover target.

It seems that MAN Force Trucks Pvt. Ltd, the €150 million joint venture between Man AG and Force Motors Ltd is experiencing some difficulties.
This report suggests that issues surrounding the localization of parts is to blame, although no mention is made of quality issues.

All told, it’s not been a good week for Indian Joint Ventures. Yesterday, output from Mahindra International was delayed by two years.

We’ll apologise in advance for merely cutting and pasting the following article, but we think that it makes very good reading.

Published in the Hindu Business Line this morning, it details AB Volvo’s current thinking on India, the import of CKD Nissan trucks from Japan, and a plan to treble exports from its Indian base.

This could get very amusing.

This report from the Times of India – which we’ve just cut and pasted below - suggests that Hyundai is looking to take a piece of Indian OEM Eicher. Nothing strange there – everyone wants a piece of everyone these days. However, DaimlerChrysler is believed to be exploring ways of leveraging its 3.6 per cent piece of Eicher – held through Mitsubishi Fuso – with a view to entering the Indian Light Duty market.

Not so long ago, DCX and Hyundai were best of friends. Then it all went horrible. And now, it looks like they’ll be seeing each other again. And so the world turns.

This report in the Times of India confirms that DaimlerChrysler is to produce CKD trucks in India. Moreover, it also makes reference to the likely future of DCX’s stake in Tata – around six per cent or so.

DCX already has a stake in Eicher – held through Mitsubishi Fuso, and, as we reported earlier, Hyundai now appears to be circling the Indian minnow. Will DCX seek to cement its relationship with Eicher – vital for its Light Duty interests in India?

Ashok Leyland and Nissan Motor are to collaborate in the joint manufacture of Light Trucks and LCV according to this report.

Not sure about this one – it is a Nissan Motor as opposed to a NDM deal, and so we assume that we’ll be looking at sub 15 tonnes. The deal certainly gives Ashok Leyland something to bat back to rival Tata – post its Fiat / Iveco deal – and it will be interesting to see how much Nissan Motor will come to rely on India as an export location going forwards.

It had to happen sooner or later.

Everyone else is piling into the Indian truck market.

So why not eBay?

Here’s a piece from the Indian press pertaining to Volvo, Nissan Diesel and DongFeng and the Indian domestic market.

It suggests to us that Volvo – in looking for a home for its Asian acquisitions – is now looking to spin both NDM and DF products out predominately into the emerging markets. This is eerily similar to the DaimlerChrysler – Fuso strategy, which will see DC’s Japanese brand in the vanguard of the company’s push to develop further business within the high growth non-Triad markets. Worth keeping and eye on we feel.

Cummins is to build a low cost manufacturing facility in India, according to this report from Reuters.

We don’t know what the company’s plans are in terms of exporting finished product or components as yet, but it will interesting to see what the response will be in terms of US popular opinion. After all, CAT’s plans for a Chinese plant have not received universal applause from its home crowd.

Again thanks to Reuters for this one. Ashok Leyland is "….. open to acquisitions and alliances in MCV (medium commercial vehicles) and HCV (heavy commercial vehicles). Nothing further in LCV though,” according to Managing Director R Seshasayee.

We’ve said it before and we’ll say it again. Navistar looks to be a very tempting opportunity. Our understanding of Indian law – parlous at best – is that foreign acquisitions can be leveraged beyond the horizon, and we reckon that Navistar would fit very nicely with Ashok’s need for engine technology. The whole Iveco Navistar thing has – along with the rest of Italy – gone silent during August – and we wonder if the Italian’s aren’t in danger of missing a truck here.

Lots of stuff happening in India of late. Hino is rumoured to be getting ready to establish a plant – possibly in Rajasthan – whilst New Best Friend Isuzu has announced that it will do likewise in the Punjab.

Volvo – which has long regarded India as central to its Asian strategy is reported to be looking once again for either a JV or acquisition involving a domestic partner. Intriguingly, Volvo India Managing Director Eric Leblanc’s comments are almost mirrored by Ashok Leyland MD R Seshasayee, who told Reuters that: "We are open to acquisitions and alliances in MCV (medium commercial vehicles) and HCV (heavy commercial vehicles). Nothing further in LCV though.” Volvo was seen – at one time – as being a front-runner for the 15 per cent of Ashok Leyland once owned by Iveco.

But there doesn’t seem to be much by way of acquisitions left to be had. We assume that Eicher remains likely to partner DC’s Fuso, whilst Mercedes-Benz now looks certain to establish a standalone plant by the end of next year. Mahindra International remains something of a enigma – should partner Navistar find itself on the wrong – or, according to Dan Ustian – right – end of a bid, then we assume that a reversionary clause may come into play, and M&M will also join the acquisition hunt. MAN’s JV with Force Motors looks likely to remain at cottage industry level for a while, whilst AMW talks big but delivers small. All told, everyone seems to have a dance partner.

We’ve been trying to watch this video – although with little by way of success – in which Dee Kapur is supposed to explain Mahindra International’s ambitions for a global truck.

Maybe you’ll have better luck downloading it.

Good article here from Bloomberg, which details the efforts being made by the Indian OEMs – most notably Tata – to offset the sales slump brought about by increasing interest rates.

We’ve blogged about this before, but with Tata now showing four consecutive months of declining sales, what are we to think about the prospects for the Indian CV business?

Torotrak has announced that it has entered into a License Agreement with Tata Motors, which will provide the Indian OEM with the rights to apply Torotrak's full-toroidal traction drive technology to a wide range of Tata vehicles

Under the terms of the license, which is subject to formal approval by the Indian Government, Tata Motors Limited has purchased the non-exclusive rights to develop and manufacture transmissions which contain Torotrak's technology for incorporation and sale in TATA branded and co-branded products.

The licence covers use of the Torotrak technology in four fields of application (passenger cars, light commercial vehicles, medium & heavy commercial vehicles, and construction equipment) and also allows Tata Motors to manufacture and sell transmissions to other customers of Torotrak in the Indian market.

That’s what this report is telling us at any rate.

But we have to wonder just how much longer the Indian bubble is going to last. Tax hikes, rising interest rates and OEMs cutting prices. It doesn’t sound too hopeful.

There’s an interesting piece here detailing Tata-Daewoo’s plans for the Korean CV market.

But our interest lies more with the European and US markets. Whilst Daewoo CV was spun off from Daewoo Motor in 2002 – and was acquired by Tata in 2004 – we wonder how much clout the brand has in both the EU and the US.

Daewoo-Chevrolet’s approach to car retailing in both markets – Daewoo is Chevrolet in Europe - has been one based around the notion of value driven products, and this would seem to have some legs as far as the CV business is concerned. Is there space for another retail L/MCV range in Europe and the US? Both regions boast market sectors that are more value than brand aware, and we have to assume that Tata-Daewoo is only too well aware of this. More anon.

A report in the Indian press suggests that AB Volvo is in advanced negotiations with, and is likely to make a bid for Indian OEM Eicher Motors.

One reason at any rate; Ashok Leyland has just released its September figures, and they’re not good.

Tata Motors has increased prices across its commercial vehicle range by 2.5 per cent, despite the fact that the Indian CV market appears to be weakening.

It seems that the diminutive Indian OEM now has a queue of suitors.

Hello again.

Reports of our death have been somewhat exaggerated; economic realities mean that when offered paying work, one does that, and when not, one blogs.

Looks like Daimler’s plans in both China and India have been derailed. This report seems to confirm our tale of a few months back suggesting that the Chinese deal – with Beqi Foton – has hit the skids, whilst this one from India suggests that the proposed Eicher deal is fading into the distance.

The Chinese news causes us to ponder. Stuttgart says:

" Beiqi Foton Truck Co. Ltd. and Daimler AG signed an Agreement of
Understanding to explore the possibility of establishing a joint
venture, rather than pursuing a previously announced share participation
in Foton by Daimler AG.

As part of this process Daimler AG and Beiqi Foton will be working with
relevant authorities."

This suggests that a separate company may well be in the offing, and, whilst we continue to regard deals in China with the utmost suspicion, establishing a new venture might provide some protection in terms of IP malarkey.

But we’re yet to see a happy deal in China, and our views on the future of the Indian economy remain ambivalent at best. As such, whilst Daimler will be chewing on humble pie in the near term, we reckon that, in time, this might just be a rather lucky escape.

We told you it would happen some months ago, and here’s the proof courtesy of Bloomberg. AB Volvo and Eicher are to establish a 50:50 JV in India, and is paying a lot of money – north of $350 million so to do.

This deal gives AB Volvo access to the MCV market, but, as Eicher is a bit part player in the HCV sector, we’re left wondering quite what its plans will be above 12 tonnes. Will it roll out Volvo branded trucks through the Eicher network, or is this more of a Nissan Diesel deal – we liked the look of the GW that was on display in Tokyo a month or so back?

Whatever, this deal means that Daimler is now under the spotlight in terms of what it does next. There’s mounting speculation that it will tie up with Hero Group, but what form this relationship might take remains to be seen.

Here’s confirmation of the Daimler-Hero Group deal.

What we don’t know anything about is the vexed question of management control. We shall wait and see.

In a move rather lacking in the Corinthian spirit, Eicher Motors has raised an objection with India’s Foreign Investment Board, thereby causing the FIPB to defer approval of Daimler’s JV with the Hero Group. Is our Leif doing some arm-twisting?

According to this report, Tata is to launch its lightweight ACE mini-truck in the United States, through a partnership with Chrysler. Other products are destined to follow.

This catches the eye somewhat.

Fiat is keen to distance itself from reports that it is joining Tata in the Indian OEM’s pursuit of Jaguar-LandRover.

Fair enough – but leaving JLR on one side for the moment, we haven’t noticed an awful lot by way of activity on this one for a while now. Whither Iveco-Tata? Whither indeed.

Why do we say this?

Bored with CAT-NAVZ.PK?

It's signed. It's on. It's happening.

But what will Daimler do in China?

According to Automotive World, which quotes Xinhua, Daimler Trucks and Beiqi Foton are still talking about some form of heavy truck relationship. In 2007, the two companies signed a MoU, but this was later cancelled as the Chinese government said No.

At present, the heavy truck industry does seem to be showing a preference for India – Daimler – Hero, Volvo – Eicher and the like. But one Euro – Indian JV – Tata and Fiat – does not seem to be a happy place at present. Nothing seems to be happening, and this report suggests that it is on hold, and may yet be canned.

For Iveco, this would be a disaster. Its place in the heavy truck business is far from assured, and without a headline JV such as that offered by Tata, things would begin to look very bleak indeed.

AB Volvo has signed - finally - an agreement with Indian OEM Eicher, and VE Commercial Vehicles Ltd is the result.

Hurrah for India, but has anyone else noticed just how reticent AB Volvo is being on the subject of Dongfeng? There is much silence about matters Chinese at present. Keep watching.

Ashok Leyland CEO R Seshasayee sounds a rather stark warning here about both Indian interest rates and fuel prices. A good if not particularly comfortable read, especially for those OEMS with much riding on the Indian business.

More scary stuff about the Indian truck market here.

Unsurprisingly, interest rates and fuel prices have darkened Ms Jajoo's mood.

Remember Iveco's deal with Tata?

Ashok Leyland has big plans to expand capacity, according to this report.

At the same time, it's also talking about divesting some of its stake in the Nissan LCV JV in which it is currently the 51 per cent majority owner.

Which, on balance, suggests some confidence in the Indian CV market. Do we share in this?

Probably not.

More Ashok Leyland news here, and the claim that the Indian OEM is looking to 'de-risk its business model'.

Interestingly, amongst those new territories likely to be targeted by Ashok is Russia. We're already seeing something of a squeeze being placed upon existing local OEMs here, with high end European products from one side, and low tech Chinese from the other. Quite what a concerted attack from India would do remains to be seen.

In other news, Ashok has made a strategic investment in the German emissions specialist Albonair. We don't know the details as yet, but think Euro IV and India some time soon.

According to this report, Iveco is to hike its prices by 2.5 per cent as of July 1^st, and DAF took similar action a month or so back. And according to this piece, Indian OEMs are getting ready to do likewise.

Prices increasing as demand slackens? Sounds like the beginning of something unpleasant.

Interesting to note that Federal Mogul is to establish a plant in India.

It's been some time since we applied the toecaps to India's prospects.

And so to the Brazilian bit of BRICS, and the news that Daimler AG is to spend €600 million bumping up truck, bus and component production at its Sao Bernardo Do Campo facility in Sao Paolo state.

Some more nasty news from India today.

Ashok Leyland has launched a 35 tonne rated tractor unit to its range.

Further news of a softening in the Indian truck market can be found here. We have mentioned this trend already, and it now seems to be developing apace.l

The Hinduja Group is mulling a name change for Ashok Leyland, according to this report. The new company - likely to be called Hinduja Leyland - means that a fifty year old name will disappear. What seems likely to stay, however, is (Hinduja) Leyland's ambition to be a top five CV producer by 2015