Daimler’s new range may set off price war in truck market
MUMBAI: The Indian truck market, which has been dominated by Tata Motors Ltd and Ashok Leyland Ltd for decades, now has a formidable third contender.
The implementation of the Bharat Stage-IV (BS-IV) emission standards may usher in several changes in the market that has been relatively slower in upgrading technology compared to cars and two wheelers.
Daimler India Commercial Vehicles Pvt Ltd (DICV) that sells the Bharat Benz brand of trucks, is looking to make the most of the switch to the stricter emission norms. Last Friday, the company launched its new range of BS-IV compliant trucks at the price of the now phased out BS-III. The move, said analysts, is likely to set off a price war in the value conscious market and may give the local arm of the German truck and bus maker an edge over its Indian rivals.
Depending on the load carrying capacity, BS-IV heavy duty trucks (16 tonne to 49 tonne) command a higher price — 8-11% more compared to BS-III models owing to technological advancements in engines and other areas. But DICV has launched the new range at the BS-III price.
Erich Nesselhauf, MD, DICV, in an interview over the weekend, said the company has managed to do so by deploying cost efficiency measures.
The BS-IV vehicles, otherwise, are expensive by 7-10% owing to a more complex technology. “We turned everything down,” Nesselhauf said, adding that the company looked at all aspects, ranging from production process, supply chain, material costs, etc. “All steps together helped us in pricing the new range competitively,” he added. Prices of heavy duty trucks ranges from ₹16 lakh to ₹75 lakh.
The company, which has been in the Indian truck market for five years, has been selling its products at a premium of 15% to rival offerings. The new emission norm and the aggressive pricing strategy may change that forever—not only now, but even in the future when Bharat Stage-VI norms kick in 2020, said analysts.
“For global automakers, every single change in the emission norms, is an opportunity to enhance competitiveness of their products in the Indian markets,” said VG Ramakrishnan, MD and managing partner at Avanteum Advisors Llp, a Chennai-based management consulting firm. This is because the technology solution is already available in other markets, and bringing it to India means that they can amortise the cost of the technology over larger number of units.
DICV’s rivals are not willing to comment on the pricing strategy of Bharat Benz trucks as yet.
Tata Motors, market leader in trucks, has yet to release prices of the Bharat IV compliant trucks, said a dealer.
In an email response, the company’s spokesperson said Tata Motors has been selling a wide range of BS-IV vehicles across segments since 2010 and the prices remain unchanged.
Anuj Kathuria, president global trucks at Ashok Leyland said the company’s BS-IV compliant trucks are expensive by 5-10% as compared to BS-III. “It’s not just the acquisition cost that needs to be taken into account but also the cost through the life of the vehicle.”