Shaping and Transforming the Indian Commercial Vehicle Industry: A comparison of TATA Motors and Daimler India

Keywords:

Abstract:

In the last decade, globalized activities and government policies to promote the trade resulted in massive changes and transformation of auto industries in newly evolving markets. It has also changed the view of established European, American and Japanese OEMs towards these markets which caused restructuring of assembler and suppliers relationships. To survive in the competitive market and to take the advantages of increasing volume sales in upcoming market are of prime importance for both local and foreign OEMs. This has led to restructuring of vehicle industry, keeping the production local whereas moving R&D and tie ups to global level (Kathuria, 1996; Rajmanohar, 2007).

Establishment of the western and Japanese OEMs is not only responsible for their own growth in these emerging markets, but also in promoting local manufactures and component industry to increase their standard while opening the doors of international markets for their business. Developing a mix policy to attract foreign investors ensuring the strong relationship amongst local and global manufacturers and suppliers is a challenging task for the governments in emerging markets because their trade policies must be accompanied by other development policies such as producing skill employment and endurance of economic growth in order to keep the foreign OEMs focused on these markets.

The aim of this paper is to discuss the above issues in context to the Indian commercial vehicle (CV) industry which has shown massive growth in production and exports since past few years. This paper responds to the following key questions:

• How Indian CV industry has been evolved in last decade,
• Which are the key factors that caused this industry to grow at the tremendous rate,
• Which are the current practices and processes in this industry, and
• What are the policies that are put into action to attract the global OEM by the government?

The paper will be emphasizing on CV sector and its subdivision in India. Indian CV industry was strongly dominated by Tata Motors and Ashok Leyland, but now they are set to witness a competition as global players are ready to get a slice of one of the fastest growing economies. Those looking to penetrate in India include Daimler and MAN of Germany, Volvo of Sweden, Nissan of Japan, and Navistar and General Motors of the USA. They all have their own way to get hold into the Indian market. For a better understanding, two case studies will be presented subsequently which are:

1) Local CV OEM (TATA Motors): This case study will be addressing company policy, production strategy, ambitions and its future prospects. It will also further extend the work done by Bruche and Becker-Ritterspach (2010).

2) Foreign CV OEM (Daimler India CV): Daimler India has a clearly different strategy to get into the Indian market. This case discusses Daimler’s activities in India such as opening up their own production plant and forming joint ventures resulting into new relationships between local and foreign manufacturers. TATA Motors CV, representing the group of local OEMs, and Daimler India, as a representative of foreign OEMs, were selected because they are mainly targeting the same market segment and their vehicle portfolio includes light, medium, and heavy trucks for local and long distance deliveries and construction sites as well as buses. The case studies of these two companies will illustrate the traditional and emerging processes and their transformation as well as the impact of foreign OEMs on the Indian CV industry. Finally, possible improvements and lessons learned will be addressed in the two case studies in context with different market strategies that the companies have applied.

References:

Bruche, G., Becker-Ritterspach, F., 2010. TATA Motors and the Financial Crisis – with particular emphasis on the Passenger Car division. 18th International Gerpisa Colloquium, Berlin, 9-11 June 2010.

Kathuria, S., 1996. Competing through technology and manufacturing: a study of the Indian commercial vehicle industry. Oxford: Oxford University Press.

Rajmanohar, T.P., 2007. Indian automobile industry: an introduction. Hyderabad: Icfai University Press.