Increasing capacity will not entail any major expenditure, to be achieved by de-bottlenecking production lines
Riding on robust demand and a strong order book, Daimler India Commercial Vehicles (DICV), the biggest European truck brand in India, will double its production capacity, launch new products and grow its retail reach by a quarter as the company looks to cash in on the demand upswing.
Demand for medium and heavy trucks from segments like construction, mining and e-commerce have shown strong growth in the last many months causing commercial vehicle makers to relook at their production capacities to capitalise on the growth curve.
Aiming at 72,000 units per annum
Speaking to BusinessLine, Satyakam Arya, Managing Director and CEO, DICV said, “We are looking at adding more capacity to prepare ourselves for 2022, and beyond because we believe the market will continue to grow. We are ramping up our supply chain further. Our current production capacity is 36,000 units per annum and we are very close to fulfilling that. Our next step is to reach 72,000 units per annum.”
Without much expenditure
This freshly created capacity which will not entail any major capital expenditure as it will be done through a process of de-bottlenecking of the production lines, will get added in the October-December quarter of this year. “Inherently we have the capacity, (therefore) we have to just add some minor equipment to debottlenecking. We will add manpower and shift to two-shift mode for both of our assembly lines,” Arya added.
As per data shared by DICV, it clocked sales of 14,222 units in 2021, which was a growth of 48 percent compared with 9,624 units sold in 2020. An all-time high of exports of 9,000 units last year also pushed DICV to enhance its production capacity.
While 2020 was severely hit by lockdown and Covid-19-induced weakness in demand, 2021 has shown a recovery that was faster than anticipated, according to market watchers.
Sales of MHCV doubled
Sales of medium and heavy commercial vehicles (MHCV) doubled to 2,00,000 units in 2021 from 1,00,000 in 2020. This year MHCV sales are expected to go past the pre-Covid 2019 sales of 2,50,000 units.
“2022 is continuing with the same growth trend. The base is bigger so percentage growth will be lower. We expect the industry to finish somewhere around 3,00,000—3,20,000 this year. However, it will take 2023 or 2024 to reach the all-time high of 3,80,000 in 2018,” Arya added.
To keep the demand momentum high DICV will launch a series of new products this year as well as improve its sales network. During 2020, the company had announced an investment of ₹2,277 crore for new products and technology. The company will launch application-focussed products and products in the heavy-duty category.
“We operate in the 10-55 tonne category and we have products at almost every tonnage segment. We will continue to launch application-focused products. We have some white spaces in the heavy-duty category and we will address that too,” Arya added.
For sales network expansion, the company is preparing to increase the size by more than 25 percent this year compared to 2021. DICV is aiming to have a sales network of 300-350 this year up from 275 last year.