Operating at 100% capacity, Daimler India Commercial Vehicles (DICV), a wholly-owned subsidiary of Daimler Truck AG, Germany, is looking to expand its production capacity at its plant in Oragadam, Chennai by 20-25%.
The plant currently has a total capacity of 36,000 units in two shifts, DICV is looking to increase this to 45,000–50,000 units in the near future through debottlenecking exercise.
Satyakam Arya, Managing Director and CEO of the company told Autocar Professional that at present, the plant’s operations work in two shifts. Debottlenecking some of them, such as the assembly line and the paint shop, would enable the expansion, without adding the third shift. “We are selectively debottlenecking the operations,” Arya said, before adding that the Indian market will continue to grow strongly over the next 6–7 years. DICV produces and sells trucks in India weighing 9 to 55 tonnes, together with BharatBenz buses.
Arya expects the upcycle to sustain and the demand for trucks and buses to remain in the positive territory for the next two years at least and the company is preparing its capacity to cater to the incremental requirement.
Strong demand from India’s domestic market as well as exports is what is driving the expansion. The Chennai-based OEM reported revenue growth of 37% and sales growth of 25% in CY2022 over CY2021. 2022 was its best year of growth, as the company sold a total of 29,470 domestic and export units of trucks and buses in the calendar year.
In the first six months of this calendar year, the market has grown by 10%, but DICV has significantly outperformed the market with volumes rising by over 35-40%. Arya expects the outperformance to continue in the second half of 2023.
Without revealing the investments required for the expansion, the top executive explained that the use of multi-axle trucks in the overall production of heavy-duty trucks has increased in recent years. This has caused a bottleneck in the end-of-line equipment, which is the equipment that is used to finish the trucks before they are shipped. To address this, the company is either duplicating the equipment or buying new equipment that can handle a variety of tasks.
Furthermore, the company exports to more than 50 markets and will continuously look for opportunities in new markets. Exports account for about 30–35% of the company’s revenues. “Our plan is to keep it that way,” Arya further added.
The expansion of DICV’s plant in Oragadam is a sign of the growing importance of the Indian market for commercial vehicles. India is the world’s third-largest market for automobiles, including commercial vehicles, and it is expected to grow significantly in the coming years. The expansion of DICV’s plant will help the company meet this growing demand.
DICV’s state-of-the-art manufacturing plant—home to the company’s headquarters and R&D operation at Oragadam, is spread over 400 acres. It also produces for the Daimler Truck brands of FUSO, Mercedes-Benz, and Freightliner, with its products exported to more than 50 markets in the Middle East, Africa, Asia, and Latin America.