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CNH Industrial to set up India investments: CEO Hubertus M Mulhauser

Banikinkar Pattanayak
CNH Industrial, Hubertus M Mulhauser, India, economic growth, vehicles maker, market share, industry news

Global industrial vehicles maker CNH Industrial is unfazed by the recent slowdown in India's economic growth as well as auto sales, and plans to invest more in the country over the next five years to expand its market share, its chief executive Hubertus M Muhlhauser has said. The Italian-American vehicle manufacturer intends to invest as much as $13 billion globally over the next five years to develop various products. Of this, some amount would flow into India, Muhlhauser said, without, however, giving the precise size of investment for any country.

"India, for us, is a very important market not only as an end-user but also as a manufacturing hub. Strategically, our facilities are placed in India. We see more investment, especially in lower horse-power products," Muhlhauser said after launching the company's five-year strategy last week. Hoping for an early resolution of the US-China trade war that has threatened to hurt companies with large operations in these economies, Muhlhauser said: "As soon as a solution to trade war is found, our growth will improve significantly in North America and Europe."

According to CNH's agriculture division president Derek Neilson, the company targets to double its market share in India by 2024, as it banks on a spurt in the growth of farm mechanisation. The company sees more potential in sub-100 horse power categories in India, given the small land holding of farmers. It plans to launch construction equipment vehicle 'Crawler Escavator' in India in 2020.

At present, CNH, which operates in around 180 locations globally, has three manufacturing units in India - one for construction equipment vehicle brands such as CASE and COMPACTOR and the rest for farm vehicles (such as New Holland tractors) and harvesters. India is witnessing one of its worst phases of a consumption slowdown, especially in the automobiles sector. After robust growth on the back of government subsidies and good monsoon for around three years, tractor sales dropped by 14.3% year-on-year to 191,305 units in the June quarter, thanks to rural distress.

Describing India as a "core market" that is growing rapidly in the construction vehicle segment, CNH's construction division president Carl Gustaf Gorannson said the company would launch a new vehicle 'Crawler Excavator' next year. Local production of this vehicle will start in the second quarter of 2020. He added that the company will boost its supply chain efficiency and improve vendor base ecosystem in India. The company has a plant in Greater Noida where it manufactures tractors, while harvesters are made in its Pune plant.

CNH has also announced its plan to split in two and list its truck, bus and engine division, as it aims to boost asset values and streamline businesses. It targets to complete the segregation by 2021 by creating a company to run its farm and construction brands such as Case and New Holland while listing a separate unit to manage Iveco and Heuliez buses, Iveco trucks and FPT powertrains.

CNH's farm and construction business had proforma sales of $15.6 billion last year, while the so-called "On-Highway" operations of the company fetched $13.1 billion. Agricultural equipment and powertrains were the group's most profitable businesses with margins of 8.9%, against 2.7% in commercial vehicles. Separately, CNH has announced its plan to get into a strategic and exclusive partnership for Iveco with US-based Nikola Corporation. The idea is to speed up transition towards emission-neutrality for heavy-duty trucks in North America and Europe.