Tata Daewoo on the fast lane

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DEMANDING MARKET: Assembly line of the Tata Daewoo Commercial Vehicle Company at Gunsan, about 260 km. southwest of Seoul, South Korea.
DEMANDING MARKET: Assembly line of the Tata Daewoo Commercial Vehicle Company at Gunsan, about 260 km. southwest of Seoul, South Korea.

The company will export HCV kits to Pakistan through a tie-up with a Karachi firm

The Korean commercial vehicle market is different from that of India, explains Anurup Chatterjee, General Manager.

A GOOD four-hour drive along a smooth highway — about 250-km — from Seoul takes us to Gunsan.Anurup Chatterjee, General Manager (Sales and Marketing), Tata Daewoo Commercial Vehicle Company Ltd., who accompanied a team of Indian journalists recently on the bus, explained the dynamics of the Korean commercial vehicle market. One in which Tata Motors has taken a step through its acquisition two years ago of Daewoo's commercial vehicle business.The Korean commercial vehicle market was different from that of India, explained Mr. Chatterjee. The emphasis was on powerful engines as speed is of the essence on Korean roads, he said. In India, speed was not an issue, but the carrying capacity of the trucks mattered.

`Century of Trust'

The signboards at Tata Daewoo's plant at Gunsan, southwest of Seoul, were in Korean. A "Century of Trust'' exhibition (one that the Tata group had organised in India also) was on to explain to the Korean employees the heritage of the Indian company that acquired Daewoo.Kwang-Ok Chae, President and CEO, Tata Daewoo Commercial Vehicle Company Ltd., and other senior officials, including Chandra Vir Singh, Vice President, and Menon S., U.K., Vice President (Finance and Business Planning), greeted the media delegation warmly. After exchanging cards it was down to business, with the officials explaining the company's operations and strategy.Tata Daewoo operated predominantly in the heavy commercial vehicle segment and in January this year entered the medium commercial vehicle segment, a segment dominated by the Hyundai-Kia Automotive Group. From January to October this year, Tata Daewoo had garnered a 25 per cent market share in this segment, explained company officials. The medium commercial vehicle segment was estimated at 12,000 units a year.They said in the two years since Tata Motors acquired Daewoo and renamed the company Tata Daewoo, the heavy commercial vehicle segment has shrunk in size. It was 15,000 units in 2003-04, said Mr. Singh, and added that this year the segment should be about 10,000 units. Besides Tata Daewoo and Hyundai-Kia, there were five European manufacturers operating in this segment.In contrast, the light commercial vehicle segment was growing and was estimated at two lakh units a year. Tata Daewoo planned to enter this segment in 2008. It would have to make additional investment, according to Mr. Singh, but that would be done closer to the actual date of launch.Mr. Singh told the journalists that Tata Daewoo hoped to sell about 10,000 vehicles this year — 3,000 heavy commercial vehicles in the Korean market, another 3,000 in the export market, and about 3,000 units of medium commercial vehicles in the Indian market. The company exported about 700 knocked down kits of heavy commercial vehicles to India where Tata Motors assembled them at its Jamshedpur plant.A tie-up with a company in Karachi, Pakistan, would see Tata Daewoo exporting HCV kits to Pakistan while the company planned to launch these trucks in Vietnam and Russia. It is in talks with a company in Vietnam to assemble the trucks, according to Mr. Singh.Answering questions, Mr. Singh explained that the light commercial vehicles could not be sold in Korea under the Daewoo brand name. Tata Daewoo's plant rolled out trucks even now under both the Daewoo and Tata brands.Mr. Chae said that after Tata Motors acquired the company, its exports had grown substantially — from 360 vehicles a year to about 3,000 now. South Africa was a large export market followed by West Asia.According to Mr. Menon, the demand in the Korean market for heavy commercial vehicles was mainly for replacing aged vehicles. Nearly 95 per cent of the Korean HCV market was owner-driven, which meant that the buyers asked for "creature comforts'' in the cabin on a par with that of a sedan.He said that the company had invested substantially in improving its information technology infrastructure and computer aided design facilities. Tata Daewoo had also developed an LNG (liquefied natural gas) powered truck jointly with Korean Gas.Mr Menon said that the strengthening Won was a cause for concern. When Daewoo Heavy Commercial Vehicles came under the Tata fold, a dollar was 1,150-1,170 Won. Today it was 940-950 Won. "The strengthening Won could affect competitiveness,'' he said and added that the integrated cost management adopted by Tata Motors and Tata Daewoo would help.In 2004-05, Tata Daewoo had a turnover of $300 million, which increased to $370 million the next year. The profit after tax increased from $5.2 million to $14 million during this period. In the first half of this financial year, the company had posted a net profit of $11 million on a turnover of $225 million, Mr. Menon said.


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