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25 Feb, 2010 12:01

Kamaz launches production in India

Kamaz has announced that it has commenced vehicle production at the Hosur plant of its joint venture with India’s Tetra Vectra.

The Russian truckmaker is hoping to find a niche in its $5 billion truck market, that is dominated by local manufacturers, with several international players recently joining the fray.

Ravi Rishi, Chairman at Vectra Group, is upbeat saying the joint venture company is competitive enough to enter the new mass market.

“The foreign makers have taken on the top end of the market, which is a very small market, not more than 2 to 3 thousand trucks, and that’s where they are pitching their products, like Mercedes Tatra, Volvo. We are coming into the mass market and we feel that is a fast growing market, and we have pitched our product in a way – we are a 8 by 4 – that means we have more capacity to carry on road than the existing Indian players.”

Sergei Kogogin, Kamaz General Director, was optimistic about the success of the new plant for Kamaz.

“I believe that we have chosen the correct area for business development by organizing Kamaz assembly in Hosur. Our partners and us have a high estimate of the possibilities of developing our joint venture and believe that significant success is possible through energetic and equipped operations in developing and producing in-demand models.”

In March 2009 Kamaz and Tatra Vectra signed a memorandum on the formation of the joint venture in which Kamaz paid 278 million Roubles for the Indian truck producer. Kamaz has increased its investment to $16 million in its plant at Hosur in south India. It has a capacity of 7,500 trucks a year, and will cater to the Indian market as well as other countries in the region. Given the poor state of India's roads, its products may just fit the bill, says Kogogin.

“Kamaz is a very sturdy and robust truck. We build trucks for good roads and bad roads, and our trucks have proven they are heavy-duty trucks. We have to work out some constructional issues on localisation, but our truck will be very suitable for India.”

Igor Korovkin, executive officer at the Association of Russian Automakers said the move was a promising and important step for the Russian truckmaker.

“Generally speaking, any expansion is good, and the entrance into the difficult Indian market is especially important and good. I think that it is all mainly due to a very good sound management.”

“I think Kamaz is going to become popular in India as the country has virtually no truck producers of its own.”

Korovkin has said that the Indian entrance could be just one of a number of openings for Kamaz in foreign markets.

“I think they will mostly be countries in the south-east like Africa and China, although China is more complicated, and there are enough domestic producers. But frankly, there is little chance of Kamaz going into more developed European countries because it’s really difficult to be competitive in the highly developed automotive markets. Today in crisis times this becomes especially clear.”

Indian roads are known to be tough taskmasters, and demand a lot from the trucks that use them. Unlike other foreign truck manufacturers in India, Kamaz has actually made its name on such roads, and given its track record, it will definitely make its mark on the Indian market as well.

Daimler, which has a 10% stake in Kamaz, recently signed two 50/50 joint ventures with the Russian truck producer to assemble light trucks and Mercedes trucks in Russia’s Naberezhnye Chelny