Expect a production cut of 20% in class 8 trucks in 2020, says Bharat Forge

Baba Kalyani, CMD of Bharat Forge, on Wednesday said that he is expecting a production cut of about 20 percent in class 8 trucks in 2020.

“2019 should be a normal year, 2020 will be a drop of 20 percent. We have factored that in our planning. The problem is not so much the US truck market, the problem is what is happening in India," he said in an interview with CNBC-TV18.

“This is not the first time we are seeing a downturn in the Indian automotive market. If you go back to 1995, it was exactly the same situation... it took pretty much four and a half years to get back to 1995 production,” Kalyani added.

Bharat Forge will be setting up a greenfield forging and machining facility in North Carolina. The first phase of North Carolina unit involves a capital investment of $56 million and this investment is backed up by secured orders, leveraging of research and development (R&D) capabilities.

“Reason for us getting into aluminium forging is we have two aluminium forging plants in Germany, which we are running almost at full capacity. There is a huge demand increase in this area. We need to have capacity in North America to cater to North American customers,” said Kalyani.

In terms of revenues from the plant, Kalyani said, “FY22 would be the first year because we will start construction end of this year. So 2020-2021 will go in setting up the plant. FY22 will be the first year. By FY24 we should be running at full capacity. That would entail revenues of roughly $65-70 million for that plant.”