MAN may partner with Volkswagen to boost fin health

By Sumantra Barooh, CNBC-TV18

German industrial group MAN worth 15 billion euro is turning to India to boost its financial health. German truck major MAN may include India as part of its global plan for a closer co-operation with Volkswagen, its single largest shareholder. Currently, MAN plans to work closely with Volkswagen at South America to supply key truck components. Though, there is no immediate plan, at a later stage MAN may take care of Volkswagen’s Van Transporter in India, reports CNBC-TV18.

“There are always possibilities. We have some joint service and sales hubs in Europe, so why not sell and service VW Transporters. There are possibilities for closer co-operation,” said George Pachta-Reyhofen, Chairman, MAN Diesel.

Before that possibility turns into a decision MAN has to tackle a few pressing matters. For example, ramping up its truck joint venture with Force Motors, which has produced only 800 trucks in the last 1.5 years. That's a small figure in the Indian medium and heavy vehicle market of 271,000 units annually.

“The few hundreds will end up by more than 6,000 by end of FY'09, it will be 12,000 a year later and 24,000 a year after that,” said George Pachta-Reyhofen.

“We are adding another 3 models in the next couple of months. By the end of June we should have 7 basic models,” said Abhay Firodia, CMD, Force Motors.

And also on the cards are some imported trucks to take on Mercedes Benz and Scania. The plans for buses will take concrete shape only after a year.

MAN is also set to get into a new Indo-German joint venture with a total expected investment of USD 400 million. The JV will be set up for railway components. MAN already has a presence in trucks, turbine, marine engine businesses in India and now wants to scale up its presence in the railways sector.

“In this joint venture we are more of a facilitator. We will develop it, take a small participation and expect that we will build all the facilities. We will bring the European and Indian investors together. This will be quite a mega investment. We expect that in June or July this can be announced if everything goes on track. The JV will be to produce railway equipment for the Indian market and also for the export market,” said Kiaus Lesker, Board Member, MAN Ferrostaal.