Tata Motors, Ashok Leyland, Eicher ramp up truck manufacturing eyeing infra boost

New Delhi: Truck makers are preparing to boost production, encouraged by the government’s proposal to raise allocation for infrastructure by more than Rs1 trillion for the year starting 1 April, two people aware of the matter said.

India’s top three truck makers—Tata Motors Ltd, Ashok Leyland Ltd and Volvo Eicher Commercial Vehicles Ltd—have asked their suppliers to ramp up capacity, anticipating an increase in demand for trucks and tippers which are used for road construction, transportation and mining.

Truck makers are hoping that the increased spending on infrastructure by the government will translate into rising demand for their products.

Total expenditure on infrastructure for the next fiscal is expected to rise 21% to Rs5.97 trillion from Rs4.94 trillion for 2017-18, according to budget estimates. A substantial part of that allocation will fund the ambitious Bharatmala road project, which aims to link about 75% of India’s districts through a network of highways.

Tata Motors has asked its engine supplier Cummins India Ltd to increase monthly supply of engines to 20,000 units from an average of 14,000-16,000 units that it now supplies to India’s largest truck maker, one of the two people cited above said, requesting anonymity.

“This would also include exports but the main focus will be the domestic market,” the person said.

A Tata Motors spokesperson said that the company has been experiencing an increase in demand for medium and heavy commercial vehicles (M&HCV).

“We are aligning our production with the increasing demand,” he said.

Demand in the commercial vehicle segment has started to look up after the implementation of overloading rules, barring trucks from carrying loads beyond prescribed limits. The BS VI emission norms that will come into effect from 2020 will also create replacement demand, the executives cited earlier said.

Sales of commercial vehicles rose 10.45% to 257,001 units in the 10 months ended 31 January. This has prompted Society of Indian Automobile Manufacturers to raise its FY18 forecast for M&HCV sales to 13% from 5-6% projected at the beginning of the fiscal year.

Chennai-based Ashok Leyland, India’s second-largest truck maker, has increased orders for tippers, the second person said. One of the firm’s suppliers has been asked to supply 250 tippers in February and 300 in March, up from an average 200 units now, the person said.

Ashok Leyland is working closely with all its suppliers to meet demand, managing director Vinod K. Dasari said in response to an emailed query.

Volvo Eicher has also asked its suppliers to increase output, the second person said. The company may also commission a new factory in Bhopal in 2019 to meet demand, the person added.

Sales of trucks are likely to touch a new peak in March, said Vinod Aggarwal, managing director and CEO of Volvo Eicher Commercial Vehicles, a joint venture between Eicher Motors Ltd and Volvo AB.