The deal was expected and is a natural extension of the growth trajectory of the sino-Indian automotive industry, Beiqi Foton Motor, China’s largest commercial vehicle (CV) maker who recently committed the largest Chinese investment in India (US$ 380 million (Rs 1,676 crore)) will source engines from Cummins to manufacture its commercial vehicles in India.
Confirming this, Anant J Talaulicar, chairman and managing director, Cummins India, told DNA, “We are in talks to supply engines to Foton Motor in India. This will be an extension to our already existing partnership with Foton in China.” Cummins Inc has a joint venture with Foton Motor in China since 2009. Beijing Foton Cummins Engine Company Ltd (BFCEC), the world’s largest engine production, is a 50:50 joint venture between both the companies and produces light duty diesel engines for the Chinese market.
Beiqi Foton’s strategy to enter the Indian market with a strong incumbant they already share a relationship, trust and understanding with reduces the risk of entering their first international market. However, according to analysts, breaking into the already established truck market in India will not be easy for the Chinese behemoth, considering their rivals are Tata Motors and Ashok Leyland who already have a well entrenched supply and distribution network. Tata Motors currently has a market share of around 62 percent, while Ashok Leyland enjoys 27 percent. The Indian commercial vehicle segment, grew almost 30 percent in 2010.
Beiqi Foton recently said that it would invest in a one-lakh unit per annum plant including fixed assets and equipment in India. The manufacturing facility, the company’s first outside mainland China, will be located in Western Maharashtra. Foton is currently exploring options to sell light, medium and heavy trucks in India. The company also recently announced to build a sales company in Mumbai with investment of Rs 100 million.