Beiqi Foton Motor in talks to source engines from Cummins

Beiqi Foton Motor, China’s largest commercial vehicle (CV) maker, is considering sourcing engines from Cummins to manufacture its commercial vehicles in India.

Confirming this, Anant J Talaulicar, chairman and managing director, Cummins India, said, “We are in talks to supply engines to Foton Motor in India. This will be an extension to our already existing partnership with Foton in China.”

It is a practice among automakers to prefer their tried and tested partners when they set up greenfield factories and enter new markets. Cummins Inc already has a joint venture with Foton Motor in China. Beijing Foton Cummins Engine Company Ltd (BFCEC), a 50:50 joint venture between both the companies, produces light duty diesel engines.

R Shankar, executive vice-president for India operations, Beiqi Foton Motor, said, “Cummins is our partner in China. We could be looking at sourcing engines from the company in India. However we are yet to finalise the plans.”

For Beiqi Foton entering a market that is already crowded will be a tough proposition. Rakesh Batra, leader, auto sector, Ernst & Young, said, “It will not be an easy task for new players to establish their set-up in India.”

Batra said Foton’s presence can affect the market share of the existing players but the new players will need to invest a lot to build the right network for selling their products. “This is where companies like Tata Motors and Ashok Leyland have an advantage.”

Beiqi Foton Motor has ambitious plans to establish itself in India. It offers trucks with payloads under 35 tonnes, light buses, sports utility vehicles, pick-ups, and medium and large buses.

The company has almost finalised 250 acres of land near Pune for setting up its manufacturing base in India. The Chinese giant has plans to invest Rs1,676 crore for Indian operations. According to the company, the plant will commence early 2013, with installed capacity of 1,00,000 units per annum.

“We will bring in the entire range of light, medium and heavy commercial vehicles in India. Currently, we are working on the localisation plan for our products,” said Shankar.

Pune-headquartered Cummins India is one of the largest diesel and natural gas engines for power generation, industrial and automotive markets. The company currently supplies diesel engines to all the major CV manufacturers including Tata Motors, Asia MotorWorks, Eicher and Ashok Leyland. It has also supplied around 100 engines to Russia-based CV maker Kamaz for its Indian operations. In January this year, Cummins had launched three new plants at Phaltan in Satara district of Maharashtra at an investment of Rs500 crore. The Indian commercial vehicle segment, which grew almost 30% in 2010, is generating a lot of interest from new players. Companies like Ashok Leyland-Nissan, General Motors, Bharat Benz have already announced their plans to give tough competition to the existing market leader Tata Motors. Tata Motors currently has a market share of around 62%, while Ashok Leyland enjoys 27%.