Strategy Analysis of MAN Truck India

Publish Date : June, 2014

In the Commercial vehicle Industry, MAN Truck and Bus is one of the brands with an international reputation and is well known all over the world. Owing to it’s global popularity, this company sought to make it’s stand in Indian soil too. MAN Truck India is increasingly becoming one of the most sought after and studied case studies with respect to this company. Being the pioneers or the creation of a new mid modern segment in India, the numbers are predicted to portray a double-digit growth, hoping to surpass the other mass market segments in the Indian truck industry. MAN India’s operation combines a plethora of parameters- MAN trucks & Buses, India operation. Force Motors, old leadership style, MAN representatives in India, Munich Office, Languages, Culture, working style etc. The scope of this case study is so vast and highly intensive that more than 100 articles could be written on this topic.

One of the main constituents of the above mentioned case study involves Dachauer Straße 667, 80995 München Germany, MAN in their Pune office. One of the main issues faced by operations in India was that of Proper coordination, especially with respect to working hours. MAN office was closed on weekends and stays open during weekdays, but MAN Force Motors was closed on Thursdays. Technically, for three days in a week there is no communication between MAN Munich and MAN Force Pune office in India. In the intermediary four days, there was also the existing problem of the time difference of 3-4 hours that exist between India and Germany. The production unit is housed in Pithampur whereas the head office is placed in Pune, making the current scenario an entangled map of business.

When the year of 2000 dawned, MAN was known globally and shortly after this the management decided to collaborate and work towards creating a solid vision and planning towards achieving it. The 9 year tenure initiated with three new ventures whose business models were extended to emerging markets. First, CNHTC China was started. Then Volkswagen’s Brazil Commercial Vehicle Business was purchased. Also, JV was established with Force Motors in India. They established that BRIC would be their first priority. Though MAN was able to create a global impact as a brand, they were incapable of creating a similar impact in India too. One of the significant questions asked was why MAN was not able to make it’s presence matter in India.

Once, Force Motors tried fitting one of its most notable products, the Tempo Traveler with a Mercedes Engine and this yielded surprisingly good results. Looking at the scenario as an opportunity, Force Motors sought to MAN Munich and strike a deal which questions the possibility of combining their products with MAN’s engines and parallely, MAN was seeking an Indian partner to secure its entrance into India. An understanding was reached and the duo successfully established MAN FORCE Motors Ltd in 2006 with Mr. Schumacker appointed as the first executive in India. Mr. Schumacker had worked on developing the military vehicle named   "SHAKTIMAN”

MAN FORCE JV Signed India_ACG

This joint venture aimed to combine the technological expertise and MAN ‘s reputation as a global brand with the local market knowledge of Force Motors and their network to secure a place in the Indian market for MAN and provide a means of expanding business for Force Motors.

However, this understanding was shortlived when there arose conflicts between the two with MAN drifting off to open a separate office in Mumbai in the MAN Diesel facility. This office in Mumbai was established with help of Mr. Atul Chandel and Mr. Xavier Polster from MAN Munich and later on, they were joined by Mr. Neundlinger from China. They planned to separately commence operations to carry on with the sale of premium TGX/TGA-WW products. However after a period of time due to various reasons, the office in Mumbai was shut down.

MAN JV India news in German newspaper_ACG

MAN Trucks India Pvt Ltd saw the commencement of their operation under the name, “MAN FORCE TRUCKS Pvt Ltd” having collaborated with Force Motors as a part of a joint venture, India in the year 2006.

But, in the year 2011 in the event of failure of this joint venture, MAN Trucks India Pvt. Ltd. This was fully owned as a subsidiary of MAN Truck & Bus AG, Germany.  The headquarters was placed this time in Pune while the production plant was housed all the way in a small town in the state of Madhya Pradesh, Pithampur with over 1000 employees.

 

MAN Force become MAN Trucks

MAN Trucks milestone India_ACG

 

 

 

 

In the course of five years when MAN Force, the joint venture was riding high, the customers were engulfed in its web of promises and slogans. Some of them are mentioned below:

  • India’s Future is Riding the New Expressways
  • Harnessing the world’s Best Technology
  • Introducing India’s New Benchmark of Reliability, Performance, Efficiency, Safety and Endurance
  • Tomorrow’s vehicles manufactured right here, in India today!

 

Product Launch:

Initial stages of this product saw a collaboration with Force, but the company realized that in the long run, this would turn out to be more harmful than helpful and would question it’s authenticity in the eyes of customers. It would lose its stature as a premium product. Following its transition from Force to MAN, the company launched a tractor head in the top tractor segment. Shortly after this, the company saw entry into the tipper segment.

Another major issue that plagued the company on account of it’s joint venture was the intercultural aspect.

Germany and India Intercultural dimensions_ACG

MAN also introduced its AIROBUS shortly after making its entry into the tractor and tipper segment. The company launched a 45 seater Luxury AC Coach.

MAN was still working with an amateur mindset and had not quite figured out what their stand and place in the market was. They had trouble figuring out their approach in the market. What made it all the more appalling was that BharatBenz entered the Indian market only after MAN but managed to sell more vehicles than MAN itself. They had failed to connect the line between MAN and Bharat Benz and analyse what they were doing right and MAN was doing wrong. While Bharat Benz focused only on Heavy duty vehicles, Bharat Benz had a plethora of segments ranging from light to heavy duty. One of the other major differences that was identified in both their approaches to the Indian market was that MAN targeted only the niche segments of the Indian society while Bharat Benz focused on mass market. It can be seen there were both financially strong and had very similar reputation and both being German companies. However BharatBenz could place a stronger foothold in India in a fraction of the time that MAN had already established in Indian markets.

Product Support

In terms of product support, the company introduced a plethora of schemes. Some include the following, with the promise of free service under the following conditions.

Haulage: This ensured that the customer got his 6 free services which could be availed at an interval or the earlier of either 15,000kms or 60 days.

Haulage with 2VCR & VP44: This supported the customer by providing the promise of 6 free service with an interval of the earlier of either 20,000 km or 75 days.

Tipper & Special Applications: This type of support could be availed on tippers and special application vehicles which entailed 6 free services intervallic at 450 hours or 30 days, whichever is earlier.

Along with product support in terms of specialized and customized service options, the company also had a flawless Warranty Policy.

Haulage: This warranted the product for 24 months or unlimited number of kilometers.

Tippers: on Tippers which gave a warranty for 18 months or 3000 hours, the earlier of the two.

Bus: The warranty on bus held good for a period of the earlier of 24 months and 200,000kms.

Apart from warranty on vehicles, there is also a warranty on separate parts which was introduced to ensure customer satisfaction, which MAN regards as their highest priority. All parts came with a warranty of 6 months or 1000 hours or 40,000 kms from the date of purchase from their respective dealers.

Additionally, the company is equipped with a network to deal with after sales need and support for its customers. This network ensured that after-sales service was on time and efficient, supervised by a global network of equipped dealers. These dealers are located ideally along the Golden Quadrilateral. Equipped individually with a mobile service van, these dealers are able to provide round the clock service to customers. In the case of large operations, “On Site Support” is provided customized to the individual needs of the customer. Apart from this, Sales and service of spares and vehicles are available.

Reasons for MAN’s downfall in the Indian Market:

There are a multitude of reasons for the downfall of MAN’s products in the Indian market. Some of them include considerations of Product and Pricing, Positioning, and Promotion techniques.

  1. Product & Price :

Launched initially in the year 2006, the company sat down with the objective of creating a vision for tractor heads being 65% and tippers being 35% of the sales plan. They were priced at 24 lakhs. Though the customers swallowed a bitter pill with the exorbitant price, they accepted it in view of MAN being a globally reputed brand. Also, MAN had promised to reduce the prices after products became localized within a stipulated amount of time.

On the other hand, another problem existed. Though they were no longer associated with Force motors, product support and after sales support was taken up using pre-existing Force dealers in Mumbai, Belgaum, Bangalore, Chennai, Coimbatore, Jaipur and Gurgaon.

Additionally, the service network was low and this caused the huge collapse of the Haulage market’s initial plan resulting in customer rejection.

MAN ‘s focus transitioned to tippers with capacity of 280HP and 25Tons thus contributing to the mining sector. But this requires them to compete with Actros and Volvo which provide the same specifications at a much lesser price.

As time went by, the market saw the entry of new, dangerous, more attractive and efficient competitors in the form of Bharat Benz and Tata with similar products and prices as well. Ultimately, it set in customers’ minds that their expectations were not being fulfilled by MAN India. The concept of MAN was turned into one of unsatisfying services and they withdrew their interest in the company.

  1. Position :

In terms of position, MAN’s failure can be owed to agreements that Indian customers have with commercial vehicles for undertaking mining projects, road constructions, irrigation work, soil transportation and metal transportation for Haulage and Tractor head models.

Initially, customers accepted MAN’s high prices and its value for money but in segments like Mining and rig applications, they required higher horse power than that provided by those than MAN launched.

They were very hasty with production. Clear proof of this manifested itself when around 16,200 tipper vehicles with 6 speed gear box was launched, when a chronic problem of gearbox failure existed in the Kerala market.

A similar problem existed when they launched the MAN AIRO bus in India. They had initial failures and without prior validation trials and servicing, the product was introduced to its customers.

MAN was evidently incapable of performing in the Indian market.

  1. Promotion:

Initially prior to transitioning from MAN FORCE to MAN, the company conducted many road shows and awareness campaigns were conducted throughout the country. Special emphasis was given to advertising to promote and create a huge awareness for the company and all this succeeded in selling more than 8,500 in India. However after becoming an independent company, JV MAN failed to create a brand image or any sort of awareness in the minds of it’s customers through the media. Many dealers have quit from MAN as confidence that the company would be able to stand tall was dwindling down to nothing. MAN’s vision that they built out of confidence, faith and sheer determination was crumbling down to smithereens.

 

MAN Trucks India New Strategy, Markets and Products_ACG

 

 

 

 

 

 

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