The phenomenal growth Indian automobile sector has witnessed recently especially in the small/passenger car segment, has acted as a magnetic catalyst for the global majors to set-up their shops in this south—East Asian giant. What has not caught much of the attention is the growth in segments like Light Commercial Vehicles and heavy commercial vehicles, which are growing at a brisk space, albeit not as fast as the passenger car segment.
Investment Information and Credit Rating Agency of India Limited (ICRA) in its report has stated that the forecasted growth rate for the HCV segment is expected to grow at the rate of 9.5-11.5 percent and that in the LCV segment growth would be 10-13 percent for the coming 5 years. It further mentions that the growth would be a tad higher in the lower segment of the LCV and the upper end of the HCV.
International OEMs who were previously unable to make a major impact in the domestic market have now entered into joint ventures with some of the major domestic manufacturers, in an effort to gain the access of the market and thereby making it more intensive competitively. The expertise of the domestic players in understanding market dynamics in great details is touted to be the key benefits of such joint ventures. Another benefit that will accrue due to such alliances is the already established vendor base and the vast distribution and marketing network, which would not have been accessible if for these JV’s.
The incumbents will try to maintain their current market position by continuing to draw strength from their extensive distribution network, established franchise and cost structures.