MAN - Unlike Scania its sister concern MAN Truck and Bus, which is also a Volkswagen Group company, decided to completely exit the Indian market after several years of unfruitful operation. The company which exited in 2018 had formed a joint venture with Pune’s Force Motors. (Image; MAN)
Volkswagen-owned MAN has decided to pull the plug on its manufacturing operations in India after failing to see any improvement in demand over the years.
MAN thus becomes the second major automotive brand after General Motors to call it quits in the last 14 months.
Volkswagen's sister concern Scania exited the bus body making business a few weeks ago to focus only on trucks.
In a statement, the Board of MAN Truck & Bus AG (MTB) said “The company has decided to restructure the India organisation. This decision is based on MTB's global strategy to focus on premium segment markets. The manufacturing, sales, and exports of the CLA range will be stopped after the existing customer orders are completed."
The 12-year-old manufacturing plant in Pithampur, Madhya Pradesh owned by MAN will be put up for sale. The company said it will try to seek a buyer who can accommodate the current workers. The plant has a capacity to make 10,000-12,000 units per annum.
GM, one of the world ’s biggest car makers, exited the domestic sales business in mid-2017 after years of accumulated losses. Eicher Motors and Polaris too decided to quit last year after sales of the only product Multix failed to take off.
MAN had entered into a joint venture with the Firodia-family led Force Motors in 2006 to manufacture and sell premium trucks in India. Force Motors, until then, was a licenced manufacturer of MAN trucks. Force Motors sold its stake in the JV company to MAN to make a complete exit in 2011.
Last month MAN had stated that it will halt all product development and model upgradation work with immediate effect in India without providing any reasons. This comes nearly two years before India adopts the stringent and expensive emission norm of Bharat Stage VI.
Cost of manufacturing trucks and buses are expected to shoot up significantly post BS-VI implementation on April 1, 2020. A typical commercial vehicle costing Rs 20 lakh will see its price rise by Rs 3.5 lakh under BS-VI.
“Going forward, MAN Trucks India will become an R&D Centre for Excellence supporting global projects,” the company said in a statement.
MAN will have aftersales as an active function for the next five years as part of its focus to provide support to its customers.
“This is part of our commitment to customers to ensure that their vehicles receive appropriate care.
As a responsible employer, MAN is extending support to all employees impacted due to this development. The India management has taken appropriate measures to support the affected team members during the transition. We are also engaging with our dealer partners, suppliers, and other business associates to support them during this transition,” MAN added.
Swedish truck and bus brand Scania AB, which is also owned by Volkswagen, exited the bus making operations in India in June this year. In July last year, Scania announced a tie-up with MG Motors for designing and manufacturing of premium buses for the Indian market.