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IN - Volvo and Eicher gear up for new products and synergies

Business Line reported that it is now over three years since the Volvo group and Eicher Motors came together to create VE Commercial Vehicles and its chief executive officer, Mr Vinod Aggarwal said that the best is yet to come.

Mr Aggarwal told Business Line in a recent interview that “It has been a wonderful joint venture and the trust between the partners has been the high point of this journey. We now want to do a lot more in terms of products and synergies.”

Volvo's strength lies in business processes and its profound knowledge of reliability issues and after-sales. Eicher is learning these aspects and implementing them in its daily working schedules at the Pithampur plant.

In addition, there is a full time person from UD Trucks of Japan working on quality management who is driving change within the organization. Incidentally, UD Trucks (formerly Nissan Diesel) is owned by the Volvo group.

Mr Aggarwal said that “Our results speak for themselves in terms of margins which have almost doubled to nine per cent. In my view, processes are more important because you learn to carry out your business a lot better. We would like to have better efficiencies in productivity, marketing practices and so on.”

VE Commercial Vehicles is now implementing an engine project to cater to Volvo's needs in Europe. These are Euro 6 engines which will be made here and tested in Europe. They can also be adapted for India's Euro 3 and 4 emission norms.

The company plans to produce 5,500 trucks each month at its Pithampur plant through 2012. The optimum capacity here is 7,500 units which could be less than three years away if the present growth momentum continues. The focus will be on heavy duty trucks (over 15 tonnes capacity), where VE Commercial Vehicles has a market share of barely 3.5%

Clearly, it is not an easy market to operate with strong players like TATA Motors and Ashok Leyland as well as competition coming in from the likes of Daimler and Scania.

Mr Aggarwal said that “Results will take time because it is a business proposition and not a status symbol, for the customer. He looks for reliability, fuel efficiency, comfort, turnaround and maintenance costs.”

Sourced from Business Line

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