No joint ‘badging’ for Eicher-Volvo commercial vehicle JV: Reports
22 Dec 2007
Mumbai: The proposed joint venture between India's Eicher Motors and Sweden's Volvo for commercial vehicles would not have a 'joint badging', or co-branding in simpler marketing jargon, if media reports are to be believed.
The joint venture company will see Volvo have a 50 per cent interest in the company, minus the co-badging that some other joint ventures in the automotive industry have seen, as reported by DNA India. According to the report, all future launches, including the manufacture of Volvo trucks in India, will be done under the roof of the yet-to-be-named joint venture company. The report also indicates that Volvo India's Bangalore unit, which is not part of the JV, has ''virtually stopped manufacturing trucks and has confined itself to top-end luxury buses.''
About two weeks ago, Eicher announced that its commercial vehicle business, along with related components and the design services business would be transferred into a new step down unlisted subsidiary company at an enterprise value of $506 million. Volvo, for tis part, would invest $350 million, of which $275 million would be cash, and $75 million would be the valuation of its Indian truck dealer and service network.
According to Eicher's press note, the joint venture would be its subsidiary, where it would hold 54.4 per cent of the equity, though Eicher and Volvo would jointly manage the company on equal shared control basis. The joint venture company would include the truck distribution network of the Volvo Group, and would have exclusive distribution rights in India for all present and future trucks of AB Volvo. Eicher Motors, once the JV is in place, would have a standalone motorcycle business -Royal Enfield.
According to media reports, some senior management at Eicher Motors has denied the possibility of joint badging for the joint venture company's products, on the grounds that the two companies cater to different market segments, and will hence remain separate brands.
Joint badging is commonplace in the auto industry, with international tie-ups such as M&M-International Trucks, MAN-Force Motors, and M&M-Renault marketing their products using joint badges. Even the country's leading car manufacturer, Suzuki, was Maruti Suzuki for the longest time, before its cars finally wore the Suzuki badge.
However, there are others such as the Toyota – Kirloskar combine that sell vehicles under the 'Toyota' badge.
