Commercial vehicles maker Force Motors Ltd plans to foray into the passenger vehicle segment by launching sports utility vehicles (SUVs) under Force One brand in July, a top official said on Thursday.
The plan is to sell 4,000 SUVs in the first year of operations, Managing Director Prasan Firodia told reporters. “Our core business remains commercial vehicles, that is our bread and butter. This is another vertical being created as the market is growing,” Firodia said.
He sees long term potential in the segment though economic factors are not showing very positive indications at present. “Growth in the automotive industry is going to be tremendous. We are not looking at this segment for short-term gains,” Firodia said.
India’s auto sales in 2010 had grown at a breakneck pace of 30 percent, but are showing signs of a slowdown as consistently rising interest rates are forcing the middle class to tighten their purse strings.
Car sales rose 7 percent in May, their slowest pace in two years, while sales of commercial vehicles such as trucks and buses rose 16.16 percent from a year earlier.
Force Motors, known for its light commercial vehicles brand Tempo, Matador and Traveller, has already invested about 1.5 billion rupees, over the last 12-18 months, in its plant to manufacture SUVs in Pithampur, Madhya Pradesh.
The plant has an installed capacity of 12,000 SUVs, which can be ramped up further, Firodia said. The production for the vehicle will be 75-80 percent localised, while other materials like the interiors and sheet metal stampings will be imported. In the short term, the company expects SUV sales to constitute 25-30 percent of the total, Firodia said without giving details.
For the fiscal year ended March 31, the company posted a 55 percent jump in net sales to 14.8 billion rupees while its profit dipped marginally to 586.2 million rupees.