Challenges and opportunities

Q & A

Vinod K. Sahay,

CEO – Designate,

Mahindra Trucks & Buses Limited.

Interview by: Bhushan Mhapralkar

 

BEN_6791 copy

Q. How do you plan to keep the excitement going at Mahindra Trucks and Buses?

A. The team at Mahindra Trucks and Buses Limited (MTBL) has done a good job. The expectations from the Blazo have been met. By and large, wherever the Blazo sold in BSIII version, the promises made by the company have been fulfilled. In this industry, at the end of the day, it is the product, technology and the core offerings that make a difference. Beyond a point, if the core is not delivering, there may not be much to do. A CV is not a lifestyle product. It has to be a profitable business for its buyer. With Blazo BSIV, we strongly believe that the delta, which we used to have earlier, has risen further. The migration to BSIV has brought about a generation change in CVs. It may not be the first time that a new emission norm has come into existence, BSIV emission norms have set a new paradigm nevertheless. The engine remained mechanical through BSI, BSII and BSIII migration. With BSIV migration, there’s not a single mechanical engine in use. It will be a world of electronics hereafter. With the move to BSIV, it is not just the electronic engine, but also the exhaust after treatment. There is an amount of after treatment required in EGR and SCR. It increases the back pressure. Back pressure will only increase further with the move to BSVI emission norms. A six-litre engine of an earlier era will no longer produce the same amount of power and torque. Efficiency, power delivery and torque will change. Coinciding with the implementation of GST almost, the migration to BSIV has signaled that a truck is going to be a far more efficient asset than it was earlier. If it used to travel 90,000 to one-lakh kilometers per year, it will now travel one and a half lakh kilometers. We have come to think that what was probably our weakness is now our strength. If our 7.2-litre engine makes us future-ready, we are quite excited. We are at a very good position right now, and will be taking the same engine to BSVI. Others may have to seek a new engine to meet BSVI emission norms. We are in a position to go forward in a much stronger way. After extensive trials we have come to conclude that our mileage guarantee stands, and in a bigger way than it did in the case of BSIII.

Q. What was the reason behind selecting SCR technology?

A. We decided to move ahead with SCR technology because it does not have any negative impact on the engine. EGR is good for a range of products where the power to weight ratio is high. In LCVs, where the power to weight ratio is upwards of 10, EGR is a good technology. In heavier CVs, where 49-tonne is pulled by a 230 hp engine, the power to weight ratio is just about four. Add the possibility of overloading, and EGR as a technology is just not sufficient. Upon adopting SCR technology, we have made an effort to be future-ready. We have chosen airless SCR, which is a necessity to meet BSVI emission norms. Airless SCR is costlier for the manufacturer, but is cheaper for an operator. Airless SCR consumes less AdBlue. Our truck will thus consume 10 to 15 per cent less AdBlue. Only one filter needs to be changed after every 60,000 kms, and it costs Rs.1200. The four year SCR cost for our truck will be Rs.7300. Frequency of filter change in air-assisted SCR is high. The costs involved are in the region of Rs.60,000 to Rs.70,000 over a span of four years. Our advantage in Blazo BSIV is even bigger than it was in the BSIII guise. We are stressing upon communicating the advantage a Blazo offers, and it is going to be a slow and steady process. Unlike industry leaders, we do not have the ability to put thousands of trucks in one go. For a challenger brand like us, we expect people to conduct a careful evaluation.

Q. What are your plans to fill up the gap between the LCVs and M&HCVs?

A. We have refreshed the cabin of our LCVs during the last two-to-three months. We have also extended ‘Fuel Smart’ technology to our LCV range. It has two modes unlike the three modes the system in the Blazo has. The light goods vehicle range gets ‘mileage guarantee’, which will be extended to light passenger vehicles. To address the gap between six and 25-tonne, we are working on a new platform that will spring up ICVs and MCVs. We plan to launch the next set of vehicles, especially in the nine to 16-tonne range in the next twelve months. The node of highest volumes in ICVs keeps shifting. Five years ago, it was in the 10.5-tonne range, today it is in the region of 13.5- to 14.1-tonne. We see volumes in three segments going forward. These would be tractor-trailers and heavy rigid trucks; trucks in the 13- to 16-tonne bracket, and 3.5- to 4-tonne segment. We will soon complete the missing link.

Q. What plans do you have to tap the growing bus segments?

A. We have been investing in buses, and have a range from 15-seater to 40-seater. In this financial year, Mahindra will launch the LPO range with 30-, 40- and 45-seat configuration. ICV platforms’ ability to come up with passenger vehicles will be explored in the second phase. We have introduced air suspension in our LCV range. The LPO range will complement the existing range of lighter passenger vehicles made at Zaheerabad.

Q. How would MTBL travel along the line of change in technology?

A. The challenge to move up to BSVI in two and half years has been taken. Alternate fuels, especially electricity, will call for supporting ecosystem. Our electric CVs will carry a lot of knowledge acquired by Mahindra Electric, a group entity. We will work jointly with them. We are working on bus projects. Heavy electric CVs call for huge investment. With electric propulsion concentrating around lighter, urban vehicles, we, as a group, do not see much challenge. We may not be ready to sell a vehicle in the market, technology-wise we will not be found wanting. Talking about cabin technology, the one that we offer is crash test certified. Termed the best, and the most modern, the cabin is also well equipped. It measures 2.4 m compared to the cabins others offer, which measure 2.2 m. AC is optional, and new e-commerce companies are opting for it. Acceptance among organised players is rising since an AC cabin improves asset utilisation. DigiSense is a connected vehicles initiative that provides the ability to talk to the driver, operator and the operator’s customer. A wealth of information is obtained. A customer operating oil tankers for Bharat Petroleum for instance can monitor his or her truck beyond the interest of the oil company to monitor its arrival and departure at its terminal. An electronically governed engine enables the ‘box’ to communicate with the engine ECU. CAN-data can be transferred, and used for remote diagnosis and prognosis. Data could be used to provide better service, and to carry out preventive maintenance. Adding huge value for us, and enhancing our ability to design a better truck, the dashboard of our truck could display CAN-data as well. Driving information could be divulged apart from fuel efficiency. When the driver stops, he can use the ‘box’ to find out a better route. Apart from geo-fencing, as and when the regulation demands, driver productivity management or driver utilisation could be incorporated. If a regulation to drive eight hours is implemented, the ‘box’ can be programmed to talk to the driver. This will call for the ‘box’ to be Wi-Fi and Bluetooth enabled. Information regarding trailer coupling and tyre pressure could be had as well. The possibilities are endless, and up to the imagination of OEM. The driver and operator should migrate to such a platform.

Q. How close are we to truly connected CVs?

A. We are not far from truly connected CVs. It is the cost that has to be justified. Regulatory push makes it easier, but the challenge lies with the operator getting the price from the consumer. What goes into a CV, someone has to pay for it. A consignor’s ability to pay for a safer truck has to be there. Considering the need for a mature ecosystem, our operating economics in BSIV is not inferior to BSIII.

Q. What growth opportunities do you see?

A. For a challenger brand like us, everything is an opportunity. We command a five per cent market share. In heavy commercial vehicles we are the number four player. We are seeing good traction in some of the segments like the 37-tonne segment, and the 49-tonne segment. In these segments our position is better than the industry average of five per cent. There are pockets where we have reached a market share of 15 to 20 per cent. The shift to BSIV has increased our competitiveness. We see a big opportunity in truck body code. Over 65 per cent of what we sell are fully-built vehicles. The sale of BSVI CVs is expected to begin from December 2019 itself. This gives rise to two issues – ROI and the ability to operate BSIV CVs. With BSVI at the doorstep, migration to larger engines will be faster. Engine back pressure will rise. We will stick to our current engine and airless SCR with some additional bits thrown in to meet BSVI emission norms. In LCVs, we will have a mix of EGR and SCR. The power to weight ratio will help to decide.

Q. As competition gets fierce, and ways of working change, what group synergies would you look at?

A. Synergies for us come out of various things. They are about technology mostly. Digisense is a result of synergy. Common-rail diesel engine is another example. There’s much synergy at the supplier end. Without synergies we would not have been as cost competitive. With the entire auto business indulging in common sourcing, the chances of dealing with the same vendors increase. Synergies at the back-end and front-end provide an advantage. Front-end synergies involve dealers. About 25 per cent of the dealers are common to our farm or auto businesses. The facilities are independent but the owner is the same. He gets the advantage of a common back-end, and we get the advantage of familiarity. In service, we are exploring synergies where smaller, lighter and heavier commercial vehicles share the same service center. It saves overheads for the dealer, and we are able to have a better reach. We have synergies with our finance arm, Mahindra Finance, which has a share of 30-35 per cent. We seek synergy with Mahindra Research Valley for development of technology.

Q. Would a new engine be developed for ICVs?

A. Some of the current engines will be upgraded. We will also make new engines out of our portfolio of engines.

Q. How do you plan to keep the suppliers and dealers motivated?

A. We believe that what applies to our employees, also applies to our partners. Satisfaction necessarily does not come from money, it comes from the level of engagement. We have scored high in the J D Power survey despite having come out of red just yet. We have scored much ahead of the Tatas and Leylands of the world. The biggest reason for this is the way we treat our channel partners; treat their problems as ours. If you speak to our channel partners, they will talk about the confidence we have given them. We make an honest attempt to solve their problems. Our partners have been with us through the worst times. Most will today indicate that the light is visible at the end of the tunnel. Most of them are raring to go. I wouldn’t say that it is a job done. The process is constant. Players like us can’t take things for granted. We can’t rest on the assumption that our dealers are making good money. Most of them are not. Most of them have just about turned profitable, or have broken even. They have some way to go to recover their past investment. We operate with a thumb rule of full honesty. We tell our partners that let us solve your problems together. We don’t commit that we can solve them 100 per cent as part of it is within our control and part is not. Some things are out of our control because of the way things are happening in the industry right now., which leaves very little retention to most of our dealers’ kitty. We are expanding our dealer network on a need basis largely. Due to our innovative approach to overcome service challenges, we have achieved good results. The service guarantee, for example, we offer on the Mumbai-Delhi corridor. No other player has been able to give such a guarantee. We are stressing on technology and low cost innovation to solve some of our problems. We do not ask dealers to invest beyond what is required. We tell them to keep room for scaling-up the operation when the need arises. In some areas, single digit expansion could happen to fill up the network gaps in this and the next fiscal. We are looking to expand the service guarantee to other Golden Quadrilateral corridors. For the other corridors, and the east-west corridor, our commitment of 48 hours remains. We have 11 parts plazas. At the end of this year, we are looking at crossing 80.

Q.What are your export plans?

A. Under the Auto and Farm sector at Mahindra, we have identified two major geographies – South Africa and South Asia. We have a group-level team looking after these. We support them. In the two geographies, distributors have been appointed. Our focus right now is on the domestic market.

Q. What is your forecast for the CV market?

A. In terms of the quarters, it is very challenging given the current situation. A report mentions that India will be the fastest growing economy till 2025. If the economy grows, commercial vehicles will also grow. There are intermediate challenges. GST is a two-way sword when it comes to commercial vehicles. It will increase the efficiency of existing fleet. It will also add to over capacity in some sectors. It will therefore take three to four months before the order is set. Operators will also evaluate. If the truck were to run 7,000 km a month, it would now run 10,000 km. The operator will evaluate fleet utilisation. He will evaluate how many new trucks are required. Most are re-calculating as the earlier thumb rules are no longer effective. There could be a momentary challenge over two-to-three months. The unfortunate bit is, it gets coupled with the lean season. There is a likelihood of short term stress. In the medium and long-term there is no need to worry. The BSVI migration will haunt the industry next.

Reflecting Russian Truck markets

Sergey_Alexandrov_1-e

Interview

Sergey Alexandrov, General Manager of ITEMF Expo

The commercial vehicle market in Russia has faced intense pressure in the recent past. How is the market placed today, and how does it impact the Comtrans exhibition?

At the start of 2017, there were 8.09 million commercial vehicles registered in Russia. Since 2009, the number of commercial vehicles has increased by over 13 per cent (by approximately 1 million vehicles). Regarding the ‘age’ of those vehicles, it is estimated that over 50 per cent of them were manufactured until 2002. Thus, every second commercial vehicle in Russia is over 15 years old. Notably, over 70 per cent of the overall commercial vehicles in Russia are domestic brands. Of the 8 million commercial vehicles, around 50 per cent are LCVs, 45 per cent are Heavy-Duty (HD) trucks with buses and coaches constituting the remaining five per cent. After the historic peak of new commercial vehicle sales registered in 2012, the market suffered a dramatic downfall in subsequent years, reaching its bottom line in 2015, which was as low as in 2009. The gradual recovery of the economy and the deferred demand since 2015 brought at the end of last year and beginning of this year very promising figures of 40 per cent growth, in the first half year of 2017 compared to the same period, in the previous year.

This upwards trend also reflects at Comtrans 2017 to be held from September 05 to 09, 2017 in Moscow. Compared to 2015, companies have expanded their exhibition booths owing to increased levels of competition. For instance, foreign companies, lost their market share in the last three years compared to domestic Original Equipment Manufacturers (OEMs) producers. The expansion of exhibition areas are on the rise not only due to the current market revival, but also due to the manufacturers’ expectations that the market will continue to grow. Companies which gave the exhibition a miss in 2015, like Volkswagen commercial vehicles, DAF and Hyundai Truck & Bus, are returning to Comtrans this year, a testimony to the revival. Subsidiaries and representation offices in Russia of the European ‘Big Seven’, as well as PJSC ‘Kamaz’, ‘Gaz Group’, ‘Uaz’ are back at the show again. For the first time in the history of Comtrans, PJSC “Avtovaz” will participate in the exhibition. In 2017, Comtrans will be the leading commercial vehicle show not only in Russia and CIS but also in Europe.

What is the medium and long-term outlook for the Russian market, concerning light, medium-duty and heavy-duty trucks?

Almost all analysts and our partners are optimistic of growth over the next three years. Most of that is based on revival of the economy coupled with the fleet renewal. Other reasons include preparation for mega sports events (for example 2018 FIFA World Cup Russia) among other state purchase support programs. A broad consensus has forecast a 20 per cent growth for LCVs, 40 per cent growth for HD trucks, and 30 per cent for bus/coach segment. I would not dare to look beyond 2020 owing to the possibility of many factors that hold the potential to disrupt the growth outlook.

How is the service sector around commercial vehicles developing in Russia, with emphasis on keywords like fleet management, telematics, service and maintenance contracts, and drivers training etc.?

The Commercial vehicle market is undergoing a major transformation. Service will be a major developing factor in the industry, influenced by increasing customer demand coupled with stronger competition in both cargo and passenger logistics. It is expected that all OEMs will be competing over the next few years in a bid to better their offerings for all the stakeholders alike: be it drivers, fleet operators or the end customer. We will definitely see more internet-driven solutions both for clients akin to ‘Uber’ like aggregators in the cargo transportation space. The objective will be to increase overall performance and efficiency levels. Russia, owing to its geographic framework is certain to be a great market place, for new and smarter technologies.

How will this development reflect at Comtrans?

The headwinds from commercial vehicle market have dropped with the bottom line in 2015-2016 (showing a 40-60 per cent decline in comparison to 2012). More so due to the strong relations with major market players like Kamaz, Gaz Group among other key international producers giving us the chance to make Comtrans 2017 a grand success. I would like to specially thank the Association of European Businesses in Russia, with a special mention of its CEO – Dr. Frank Schauff for the valuable support extended. As mentioned above, there are so many new trends and recent technological developments of great interest to professionals. It is for this reason that we launched for the first time, a flagship conference – Moscow Commercial Vehicle Summit which is certain to become a recognised platform for exchange of ideas and presentation of strategies among decision-makers and opinion leaders. Comtrans was established in 2000. However, this year for the first time, ITEMF Expo, a joint venture of ITE Group (Great Britain) and Messe Frankfurt GmbH (Germany), has organised the fair.

What are the key changes that one can expect in this edition of Comtrans?

It’s a fact that Comtrans is already a well-established brand known not only in Russia but world over. Therefore, my colleagues and I tried to preserve all achievements of the past, at the same time adding newer elements. Nonetheless, expanding the exhibition area is not an end in itself, equally important criteria for the exhibition to succeed is customer satisfaction. That is why ITEMF Expo always pays a great deal of attention to additional services offered to the exhibitors. From technical support issues on the venue, to cooperation with companies after the exhibition. Notably, in addition to the press-day for the first time ever, we plan to hold a summit on topical issues of the commercial vehicle industry development too.

Another important area of focus is the synergy achieved between exhibitions like MIMS Automechanika Moscow and Comtrans. Requests were received from across companies, for sending them an offer regarding the participation in both exhibitions. It was particularly the case with the companies associated with components and spare parts production both for cargo and passenger vehicles. MIMS Automechanika Moscow has its special section called Truck Competence aimed at promoting companies and their products in the commercial vehicle industry, and we would like such an idea to be developed within Comtrans. Last but not least, one of the factors that contribute to the success of Comtrans is the ‘The Best Commercial Vehicle of the Year in Russia’ contest. An official award ceremony for winners, traditionally held within the framework of the exhibitions Comtrans making it a one of its kind initiative.

Could you hint at the novelties and innovations that visitors of the Comtrans 2017 expect? 

It is often the case that companies prefer to keep a veil of secret ahead of the show when it comes to novelties and innovations. What we know already today is that major Russian OEMs (Kamaz, Gaz Group and Autovaz) will definitely present some new models coming to the market inclusive of some electric vehicles. Scania, MAN and Isuzu are expected to premier for the Russian market too. The press day, which will be on September 04, is complete with press-conferences of all major OEMs. First up will be a press-conference of Uaz, presenting a range of new models. I am confident that after this day, when our press colleagues, journalists and partners enjoy innovations, visitors will be inspired by many products and solutions from a wide number of other companies during the entire exhibition.

With exhibitors from 12 countries, Comtrans is an international show. Apart from Russia, which countries are most represented? 

In 2017, Comtrans will be the leading commercial vehicle show not only in Russia and CIS but also in Europe. Traditionally companies from Turkey, Europe, Germany with the official German pavilion this year are well represented. Exhibitors from Asia will be focusing not only on vehicles but also on spare parts and solutions for the commercial vehicle aftermarket this year.

With all the new technologies, internet and worldwide communication possibilities, don’t you think exhibitions in their current traditional format risk being outdated?

Holding exhibitions is one of the channels for product sales and promotion. Of course, our world is changing, and new technologies are being introduced at a fast pace in the exhibition business. In particular, it refers to interactive technologies which transform communication from the real world into a virtual one. This process certainly holds potential in the near term. At the same time, direct and immediate contact among people continues to be the most important channel given that we are all social beings to begin with. In my view, there isn’t any advanced technology, which can replace real-life communication between people. It is an exhibition, which provides an opportunity to get acquainted personally with all new products of the market under one roof, whereby one can gauge current market trends. That apart, one can get a touch and feel of the products in person apart form getting in to the driver’s and passenger’s shoes. This holds the potential to gain valuable insights on the products on display. Meeting opinion leaders at such a forum is always inspirational. Therefore, exhibitions will always have one undeniable advantage – the opportunity of direct, maximally wide and rapid communication between sellers and their customers, on issues which sometimes take weeks or even months to be settled.

COMTRANS_7-e

Shaping the future

IMG_2777 copy

Q & A

Jacques Esculier,

Chairman and Chief Executive Officer, Wabco Inc.

Interview by: Anirudh Raheja

Q. What role do you see Wabco playing in shaping the future Indian CVs?

A. It is the turn of connectivity after electronics, which helps to improve safety and efficiency. It is about connecting the truck to the ground, and beyond braking, Automated Manual Transmission (AMT), and electronically controlled air suspension. It is about information that optimises the way one liaisons with the truck, and helps the driver to be more careful and efficient. Wabco is globally present in this area, and wants India to benefit from this technology. We have already taken a lead position in providing ABS. It is electronically driven, and one of the first electronic systems to find its way to Indian trucks. It is the first basic feature on the path to safer commercial vehicles. We are rolling out AMT, which makes driving comfortable. It also elevates efficiency, and can save almost five per cent fuel. We are introducing technologies and capabilities around advanced driver assistance systems like Autonomous Emergency Braking (AEB). Wabco introduced AEB to the world of CVs, and has been already mandated in Europe. The lane departure warning systems Wabco offers, assist the driver to avert accidents caused by drowsiness. In US, this feature is incredibly popular. It may not be mandated, but has been instrumental in avoiding 85 per cent of the collisions. In India, we are piloting this technology. We are taking an active part in providing the functionalities and hardware for telematics and fleet management. It will be a major step towards optimising logistics. The air disc brakes we have designed may not be electronically driven, they are however essential for safety. Not only are they lighter and simpler than the competition, they save 25 kg per wheel weight. They also enable 10 per cent gain in braking distance. The money that would have been spent on maintenance is saved since there is no need to change the pads. Air disc brakes can go up to 100,000 kms, and this has been demonstrated in India. It takes one fourth of the time to change the pads when compared to drum brake liners. We will soon localise air disc brakes in India. Technologies like these may have been rooted into designs and initiatives taken in Europe, they are being systematically reviewed for cost optimisation. We are leveraging the engineering and supply chain we have established in India. We are conscious about the need for such technologies, and there exists a price constraint.

Q. How is the demand for air disc brakes, AMT and ABS in India?

A. OEMs in India are interested in new technologies. There is awareness for the need to contribute to make roads safer, especially with the country developing so fast. There will be more commercial vehicles on the road. Their rising number will call for systems to make them safer. I think there is pressure from global manufacturers entering emerging markets. They are bringing technologies from Europe. Regional manufacturers are closing that gap and leap frogging to demonstrate that they are also capable of introducing new technologies. Truck manufacturers in India share the ambition to export vehicles to regions with higher standards of safety and efficiency. To compete with fully equipped European trucks, one has to be on par in terms of technology. Such reasons, I think, converge towards a strong interest for OEMs to develop and adapt those systems to their platforms.

Q. What is the level of localisation in AMT and ABS?

A. ABS has been completely localised, including the Electronic Control Unit (ECU) that has been historically manufactured in Europe and exported. With a strong focus to minimise costs in India, we decided to break the rule and manufacture ECUs in India. We have already achieved zero quality defects. Riding on this success, we will make ECUs for more systems in the future. For AMTs we have built an assembly line in our factory at Chennai. We are also progressively localising since we have a network of suppliers. Doing this will contribute to lower pricing for OEMs and fleet owners.

Q. How do you look at your vendor base in India?

A. About 30 per cent of what we manufacture in India is exported. All compressors for Volvo trucks worldwide are built at Chennai. All suspensions for BMW cars are built at Chennai. The suppliers in India are world-class in terms of cost, quality and delivery. It is amazing to see the commitment they have, and the way they adopt management approaches like lean management and six sigma. Our suppliers in India not only support Wabco in India, they also support our factories in Europe and US.

Q. What constraints do you face when it comes to driver assistance systems in India?

A. Driving in an Indian city is quite different from that in an European city. Highway driving is different. The environment there is fairly similar to other parts of the world. We are right now piloting those systems, gathering data, and understanding what exactly the drivers of trucks and buses are exposed to, and how we have to adapt those systems. This would ensure that we do not offer features that are not adaptable. We want to develop functions that specifically address the Indian environment. We are working with OE partners to process this information, and optimise the interface.

Q. India is a regulatory driven market. Does it pose a limitation for autonomous and connected technologies?

A. Most governments of major countries like India are going through the same path. It can be discussed and debated whether ABS, stability control are good or not. Someone has to put the stick in the sand and drive the market. It has been proven time and again that the steps governments take are instrumental in enhancing safety on the road. The Indian government is optimistic about cutting the number of road fatalities by half in the next five years. This would call for the need to impose certain improvements in the way vehicles are designed. They have to meet the set targets. Europe has already mandated AEB and lane departure warning. There are important milestones on the horizon. I think, stability control will become mandatory in US by mid 2017. It will soon be mandatory in Japan as well. It became mandatory in Europe a few years ago. For India to follow suit is absolutely normal. The move up to BSIV emission standards reflects upon us human beings addressing the problem of pollution. It is about pushing the industry towards cleaner engines and vehicles. There was quite a lot of push when EuroVI norms were implemented (in Europe). Lot of technical challenges had to be overcome to meet the incredibly stringent requirements. As a citizen, I am happy that our governments have been enforcing things. The talk about BSVI is normal and healthy.

Q. Isn’t the time frame to BSVI too short?

A. I would say that the technology is available. It was invented by the European manufacturers. All the technologies that are needed to move to BSVI are already there. About the 2020 timeline, it is hard for me to comment. It is a decision that India has to make given the constraints. The sooner the automobile industry offers cleaner air to the society the better it is for all.

Q. Bus Code implementation was delayed. Some regulations seem to lag. How does that affect you?

A. For us, the first experience was the ABS mandate. The government stood by its word and it happened on date. For us, the uncertainty is about managing the supply chain depending upon implementation. We factor those things in our planning.

Q. There is an urgency in implementing the truck code. Crash norms are also being talked about. What do you think of their implementation?

A. Whenever we set off, we always factor such things in the planning. There are a lot of stakeholders, and it takes time to reflect upon the impact of the measure you take. The Indian Government looks decisive. The world seems to be impressed with whatever is going on in India.

Q. How has been the response for AMTs in buses?

A. AMT technology took off in US only three years ago – when the price of oil was USD 100 per barrel. Each market has its own way of maturing. Like any other location, technologies will be adopted in India too. The trend of technology adoption is accelerating in India. It is aimed at elevating safety and efficiency. Except collision mitigation system, safety is often regulatory driven. In US, fleets are absolutely convinced that collision mitigation lowers accidents. In the case of efficiency, it is easier. From the total customer satisfaction point of view, AMT will pay back in a matter of months. The technology is mature. AMTs supplied to Ashok Leyland Janbus were as per the JNNURM program. We also supplied AMTs to many fleets in India through that program. It was specified under the JNNURM scheme. Against automatic transmission in terms of fuel saving, AMT is better. The central government has structured Atal Mission for Rejuvenation and Urban Transformation (AMRUT). It has asked the state governments to decide upon the bus specifications. The only problem is, the industry is fragmented in terms of fleets, which is not the case in the western world. There are large fleets there. The fragmentation makes it a bit difficult to reach out and convince. Smaller fleets makes it complicated. We have a strong presence with almost 7000 outlets to distribute our spare parts; 250 approved service centres, and precious anchor points which are in touch with trucks drivers and fleets on a daily basis. Wabco is taking steps to communicate values that technologies like AMT could bring.

Q. How do you plan to increase your reach in the Indian market?

A. With advanced technologies finding their way into India, it is becoming difficult for road-side mechanics to attend to vehicles. Training is essential. We are providing them (mechanics) with the right diagnostics tools and equipment. We have placed service engineers in the field to support our network. Roughly at every 100kms, we have a touch point. We are also looking at expanding both, the service engineers and the touch points. There is a need for the service centers to elevate themselves to be able to handle advanced products. There is more and more electronics involved. Globally, there is a Wabco university to support people involved in fleets. In India also we have a similar arrangement, but not as big as a university.

Q. India is known for its IT prowess. Are you investing in software development in India?

A. We have almost three times more software engineers in India than in Europe. Their number is fast growing, and their capabilities are formidable. The latest braking system Wabco has developed for Daimler global, 85 per cent of the software it has, was developed in India. This braking system will go on every Daimler truck, and is modular in nature. India develops major pieces of AMT software as well. The Indian operations are also capable of locally adapting systems developed in other advanced markets for the local market. In case of AMT, we made some adjustments to the system to suit the local working environment. India is right now the second pillar of engineering for us. Germany may lead in advanced technologies, the basic software is built in India. India is thus driving the mechanical aspect of our products and systems. No product is released anywhere in the world without Indian engineers either contributing directly to it, or reviewing it to make sure it has been optimised. This is because there are particular skills including the capability to engineer frugally, which leads to a drop in costs by 30 to 40 per cent. We have systematically shifted all the products we have designed earlier to India to avail of the frugal engineering capabilities the engineers here posses. While it is not just one country that benefits from what we develop in Europe, India is a major contributor to the value Wabco provides to truck, bus or trailer manufacturers the world over. We have more Wabco employees in India (close to 4000) than we have in any other country in the world. They amount to almost one third of the total Wabco employee strength.

Q. Do the Indian operations make a centre of excellence?

A. India is a centre of excellence for vacuum pumps, air suspension, compressors and actuators. We build actuators that are designed in India, in Europe, Japan and US. Compressors made in India support Volvo globally. Around 300,000 ABS systems in India have been localised. There has not been a single reject. Actuators made locally are commanded by ABS electronics. ABS directs compressed air to them.

Q. With systems like ABS and AMT finding their way to India, how far are we from connected vehicles?

A. We are fast moving towards connected vehicles. Wabco has developed a new strategy in that direction. It’s a completely new area of value that our industry would provide to the fleets. We acquired a leader in fleet management solutions in Europe. In India, we have developed a product, that is essential to connect the truck to the ground. It simultaneously gathers information (on fuel consumption, driver behaviour and other functions), processes it and transmits it. Functions like fuel consumption and driver behaviour are incredibly valuable for fleets to optimise their way of functioning.

Q. What is the level of involvement of Wabco when it comes to cloud based technologies?

A. We are gathering information as we are building electronic systems. We know how to interpret enormous amount of information, process it, and send it to the cloud. We are already building all those elements that will ultimately lead to powerful functions. We are working with insurance companies in Europe to gather all the safety events that have happened on a truck. We can have those insurance companies access the level of risk. They can accordingly adjust the premium by judging the level of risk. This can push other fleets to improve their performance; check how many times they trigger safety mechanisms. We have cameras that watch the driver, any time there is a safety event. We send the record of what has happened in the last 30 seconds to a centre in India. This system is very useful in US, as it has driven the number of events down significantly, making everyone safer.

Q. Is telematics a growing business for Wabco? How much does it contribute globally?

A. In India, telematics is picking up well. With BSIV emission norms, the use of electronics will grow. We are engaging with Volvo Eicher as an OE supplier to develop telematics for them. Telematics is a sizeable business for us, and is growing fast. In digitisation, the sky is the limit. The potential of what the big data will bring to fleets in terms of enhancing their efficiency is high. Half the trucks today anywhere in the world are empty. Think about what a Uber type of system can bring to this industry. There are many things in the fleets that can be brought together by the digital world.

“All compressors for Volvo trucks worldwide are built at Chennai.”

Trendline

The trend of technology adoption is accelerating in India. It is aimed at elevating safety and efficiency.

India is a major contributor to the value that Wabco provides to truck, bus or trailer manufacturers the world over.

Manufacturing tech

IMG_2747 copy

Q & A

Samir Yajnik,

President Sales & COO – Asia-Pacific, Tata Technologies Limited

Interview by: Anirudh Raheja

Q. Tata Technologies is associated with Tata T1 truck racing. How is it helping the company?

A. There was complete disbelief when we got a call initially. This, despite us being an quintessential part of the Prima truck development at Jamshedpur, and in Korea. The positioning element was clear. Tata Motors wanted to position it (the truck) as a unique technology driven product in the market. There was also a need for a strong social angle. Trucking in India is looked down upon. The need was to change this perception. It was also about showcasing truck racing from a current and futuristic technology point of view. At Tata Technologies we saw a strong reason to drive improvements in the truck. Our focus on three markets – automotive (PV and CV), aerospace and Industrial Heavy Machinery (IHM), gave us a reason to drive technological advancements for different applications. We were clear about being associated with this project. It was in the third year that a question arose: How much more exciting and different can this get? The social angle, brewing in the background, was brought in, and not as a chance. A full fledged process of bringing the drivers up to racing standards made for much learning. We brought those elements into our courses in India. We are looking at them to provide a better means to train engineers; to make better vehicles, and to operate them successfully.

Q. What role is Tata Technologies playing in the CV space?

A. Our association with trucking in not only limited to product development, it also involves fabrication, painting, and other tasks. We simulated a line that is ergonomically designed; it is a result of much pre-work. In the case of the 1000 hp race Prima, CAE application was used. Simulation is pervasively involved in the early thinking stages, and all the way through to testing and validation. It helps to understand how different things put together will fare. Dynamic simulation, static simulation, ride and handling simulation, crash simulation, NVH simulation, and durability simulation is carried out. There is the ‘connected’ part with the use of different materials. The suspension system of the 1000 hp Prima race truck is connected to the LCD screen in the cockpit. We were involved in activities like the water jets; the temperature at which they will work. They are linked through sensors. Simulation is necessary for mechanical as well as the electronic side of it. It is also required for testing. For automobile companies to dominate the market, it is necessary to take down competitor vehicles; tear them down, and run them on the test track to understand the dynamics. We partner to simulate and understand how the product being conceived should be positioned in the market, and at what cost. Also, how it should be positioned. We partner to understand how a product should be developed from the pre-concept stage so that the price is right. We talk to suppliers, negotiate with them for the OEM. The early concept prototype that is built should come out at the right ball-park. We do talking through to New Product Introduction (NPI) and production. We are involved throughout the cycle – from the concept stage to the grave. We also help dealer management; capture data and feed it to the engineers. It is not just about concept-to-market, but also about concept to aftermarket. The insight obtained is ploughed back into the development cycle.

Q. Isn’t the work you do overlap with some Tata Group companies?

A. There are areas of overlap, but there are many more areas where we complement each other. If you look at an auto OEM, there are a lot of things that need to be done, including infrastructure management. We are very strong in that space. We have grown overtime in engineering. We were born and brought into the market to help companies engineer a product and provide technology enabling services around it. We have found a good balance while working with OEMs like Chrysler and JLR.

Q. So, you are a software and a hardware company?

A. I would say that we are a product-centric services company. This is good because it makes us good at networking and hardware management. We know how the whole thing works. A company specialising in software may make great automation software, we are about application of technology for building a product.

Q. You are neither a supplier nor an OEM. What makes you an associate of the CV industry?

A. We call our engineers PFLE (Passionate Fun Loving Engineers). There is a lot of innovation that can be attained, and when challenged by the problems faced. Simple things like noise and vibration can pose a challenge. A certain level of noise and vibration is just not acceptable in passenger cars; not in India either. When a minor or major innovation can help to deal with the challenge, there is a reason to be excited. It can be patented, and helps to get involved with an OEM. It can be used across different industries. Since we operate in different manufacturing environments, the lessons we have learned in one industry can be applied to other industries. The lessons that we learned in the digital factory, we are now using in the aerospace industry. It is exciting that such learnings can contribute to product improvement.

Q. Technologies like block chain and telematics are drawing attention. How do you look at them?

A. The involvement of suppliers in product development often starts at a later stage. The involvement of core suppliers in the development of a new product should start early. This would help to keep cost, weight and performance targets from becoming unpredictable. While technology is driving the sub aggregates, the big question that arises is, how early can they get involved. There is a need to have strategic suppliers. At the time of negotiation, 90 per cent of the concept is already in mind, and frozen. They (suppliers) are in no position to influence. It is therefore necessary to build a process that bridges the gap and brings them (suppliers) early into the equation. This would enable work through cloud of options to facilitate a product that is priced right.

Q. Amid the changes experienced by the CV industry, what role is Tata Technologies keen to play?

A. We were taken seriously when we made an impact outside. We did connected architecture for a brand new EV coming out in the Chinese market. Tata Motors was surprised. Our acceptability is growing. For the new norms, on the product development side, we looked at packaging, at cooling systems, and how everything will change when new engines are incorporated. Running analytics is important. It will provide valuable insights. Consultants can provide data regarding OEMs, and their supply chain, They can tell about vehicle performance in geographic terms. Not just for Tata but also for others. Mobile Apps. are coming in. They are finding their way into factories as well. The whole process of integrating the vehicle in a factory can be sequenced far better. Better inventory management can be achieved. Digitisation of manufacturing place is what we want to excel in. We understand how things should be sequenced such that they fall in place; are right. We are not going to be just a service provider but also run in the field, and beyond.

Q. As a home grown MNC, how do you seek a balance between domestic and international business?

A. We spend a lot of time on engineering outsourcing. We work with our clients to improve the product. This calls for an amount of balanced on-site and off-shore capability. The need for on-site presence could be as much as 70 per cent. Off-shore capability may call for much local engineering. Of the US $ 430 million revenue, almost US $ 150 million came from Europe, riding JLR primarily. In US, Chrysler and Caterpillar are our big clients. In India, we are in talks with new auto companies.

Q. Many companies are looking at India for off-shore activities. Is it because of the frugal engineering abilities?

A. I would say it (frugal engineering) is injected into our value proposition. May it be us, or Magna Styer, for example, we both can offer what is needed at a cost. Only our cost is much more balanced. We have a lot of engineers working together. They are in India, Romania, Thailand, and at other locations. Western engineers provide you a proposition in terms of product development and enabled engineering at a cost point that is higher. Having done scores of vehicles to build a database, we are ready to work on vehicles.

Q. How intensive is the business model. The amount of risks involved?

A. We got an opportunity to work with western OEMs; to benchmark with them, when we worked on the Nano project. It was then that we realised, it was a great way of starting an engagement. We thought about building our own lab. It is investment intensive. It is however necessary to understand that it works as a differentiation for us in the manufacturing world.

Q. Driverless vehicles are drawing attention. Is Tata Technologies playing a role?

A. We have been involved with technology companies in California where they are trying and testing driverless vehicles. In the space that we are in, the relevance of driverless vehicles is not as much as it is for driver assistance. We recently set up an innovation lab in California. The idea is to engage with technology companies, which will give us those insights. We are also working with companies that have to comply with EuroVI emission standards. To that end, we are already training our people. We are making them understand what they would be up to. We have a specialist organisation in Romania that focuses on powetrains and engines. We have had the opportunity to work with customers that wanted to progress to EuroVI. We co-invest with our customers; understand their current capabilities. We take what they have, put in our own talent, and help them frugally develop a product that is compliant. The lessons we learn, enrich our ability to develop frugally engineered products.

Q. Do you conduct tear down analysis in India?

A. We derive a cost advantage by doing tear down analysis in India. We set up a center at Pune, and since most of our customers wanted to see the operations happening in front of them. It would have been far more expensive to carry out the same in western countries. Even if it is a high end vehicle, we can bring it here, and tear it down. We are already doing it for multiple OEMs.

Q. How much of your business comes from CV segment?

A. Nearly 65 per cent of our business comes from automotive. Add 10 per cent for IHM. About 30-40 per cent of this total is from the commercial side. About 45 per cent of our R&D spend is on automobiles. Apart from our Pune centre, we have a center at Romania and Thailand. Through Land Rover we have got a fairly big team of highly specialised people involved in light weighting at Coventry. We also have a centre in Detroit, which is smaller and does work for dashboard and interiors. We also have one in China, We will go to Chennai this year. Our growth rate would be more than 10- to 15 per cent.

Q. CVs are modernising. What opportunity does Tata Technologies see in them?

A. A lot of our competitors have built software for connectivity, for embedded electronics, and do it on a mass scale. It is not that we don’t want to do it, where we are involved is in the area of connected architecture. It is about talking to the central servers by the means of telematics and service providers. Through NASSCOM we want to play a role in the IoT standards. The IoT devices that are coming up, have not been tested for human safety. There are no mandated standards as yet. We want to be involved in the setting up of those standards. Safety is quintessential in everything we do. It is a part of our sustainability criteria. We are trying to develop a network of companies that will help define those standards. I have an IoT lead section that works with NASSCOM COE.

Q. How long will it take and how it will effect automobiles?

A. When you talk about standards, there are standards available in the European market which are stringent. They are however closed. There is a need to connect with them. Standards are needed in India too. How long it will take is an interesting question. It is an ongoing process. We are working with the government in each country that we are present in. Ultimately our proposition is to apply technologies. We also connect with construction equipment companies and work with them in setting new standards for safety.

“We are involved throughout the cycle – from the concept stage to the grave.”

Trendline

We were born and brought into the market to help companies engineer a product and provide technology enabling services around it.

We are about application of technology for building the product.

Rating dealer satisfaction

397d875

Shantanu Nandi Majumdar, Director at J.D. Power.

Elaborate upon the survey as a first for the commercial vehicle industry. What were the various factors kept into consideration?

The CV segment was covered for the first time in the 2017 study to offer the industry a holistic view on dealer satisfaction levels in India. It has been a long standing request from FADA, who have supported us since 2011 from the time the study was first undertaken. There are both similarities and differences across segments, in the way business is approached. The overall dealer satisfaction is determined by examining nine factors that include marketing and sales activities, products, vehicle ordering and delivery, sales team, parts, warranty claims,after-sales team, training, and manufacturer support.

How different is the satisfaction among the CV dealerships based on their expectations from the manufacturer?

At J.D. Power, we are of the firm belief that satisfaction is not only dependent of expectations, but also a dependent of the actual delivery of each of the metrics that impact dealer satisfaction. The Dealer Satisfaction Index (DSI) for the CV segment is 773. We believe that the DSWAMI study provides a platform for dealers and OEMs to come together, and interact in a constructive manner so as to improve upon their business relationships, and the overall satisfaction levels.

What percentage of dealerships expect to generate a profit in this fiscal year (2017-18), and what percentage of dealers anticipate a loss?

More than half (51 per cent) of CV dealerships expect to be profitable in this fiscal year, with only 15 per cent of the dealers anticipating to make a loss.

What according you needs immediate attention from a manufacturer perspective when it comes to addressing dealership problems?

Marketing and sales activities are an area of weakness. It has the lowest overall score as per the study. One-fourth of commercial vehicle dealers indicated their disappointment with a variety of sales promotions (26 per cent), and dealer advertising allowance (27 per cent). Dealers will benefit from additional support offered to them by OEMs. Another area of concerns is the need for faster settlement of claims.

What are the concentrated efforts needed from CV manufacturers in a bid to lower system discrepancies?

Dealers have raised concerns in the past about delays and discrepancies in terms of vehicle and parts ordering. Ensuring that dealers are kept informed of any issues in the concerned areas is a key to lower discrepancy. OEMs additionally need to review their support systems and determine the need for any upgrade.

What is the impact of digitization on auto sales and how can dealers best leverage it?

The growing number of digital touch-points is reflective of the growing consumption of Internet by the Indian consumer. Most brands are developing, and regularly updating their social media platforms (namely Facebook and Twitter) as additional access points in a bid to reach out to their consumers. Social media campaigns and webcasts can prove particularly beneficial when it comes to launching new products. While some of the larger dealerships in the country have already initiated such interactive relationships with consumers, others could potentially benefit with a higher degree of OEM support.

Its about tippers

Q & A

Siddharth Kirtane,

Head – Sales & Marketing, Value Trucks, Mining Business, VE Commercial Vehicles Ltd.

Interview by: Ashish Bhatia

Q. How has the Pro 6000 tipper series evolved in line with the BSIV norms enforcement?

A. The Pithampur plant has been exporting EuroIV and EuroV engines to Volvo Trucks and other (Volvo Group) brands since four years now. In terms of technology, Eicher engines were upgraded to comply with BSIV emission norms much before the respective norms came into effect. In the case of Pro 6000 and Pro 8000 series tippers, we are using Selective Catalytic Reduction (SCR) technology to meet BSIV emission norms. At VE Commercial Vehicles (Eicher), we have already sold 100 units catering to different applications and across segments.

Q. Was it just the inclusion of SCR technology that made the trucks BSIV emission norms compliant?

A. We adopted globally proven SCR technology to meet the BSIV emission norms. SCR technology is one of the most advanced and fuel-efficient technologies that can reduce diesel engine emissions (PM and NOx to near zero levels). In the SCR system, the exhaust gases are treated outside the engine and in the exhaust system. This paves the way for the engine to run in an optimised manner, and leads to enhanced reliability and significant improvement in fuel efficiency as compared to a BSIII engine. The SCR after-treatment works such that a liquid-reducing agent is injected through a special catalyst into the exhaust stream of a diesel engine. The reducing source is usually automotive grade urea, also known as AdBlue or AUS32. AdBlue (urea) sets off a chemical reaction that converts nitrogen oxide into nitrogen, water and tiny amount of carbon dioxide (CO2), which is later expelled through the vehicle tailpipe.

Q. Have the prices risen due to the upgrade to BSIV emission norms?

A. Compliance to BSIV emission norms means the exhaust gas emitted by the vehicle should adhere to the specified limit (3.5 g/kWh) as per the Central Motor Vehicle Rules. To comply with the norms, certain design and technology changes to the engine, fuel injection system, catalyst, filters, sensors, etc., were necessary, and have been done. We are looking at a five to 10 per cent price increase across the Pro 6000 and Pro 8000 series tippers.

Q. Was there any inventory impact due to the transition to BSIV emission standards?

A. It is not unusual or abnormal to be left with an inventory at a certain point in time. There will always be some inventory in the channel. It is a regular phenomenon – to have three weeks to a month worth of inventory. We were left with around 2,000 units. It will be easy for us to export at least 50 per cent of our inventory and convert the remaining to BSIV standards.

Q. How have you leveraged the synergies with Volvo Group as you export engines?

A. Pro s eries is designed and developed with the Volvo Group processes and technology. It also seeks synergies with Eicher’s frugal engineering abilities and local expertise. The VEDX5 and VEDX8 engines have been designed and developed in collaboration with the Volvo Group, and use the latest Engine Management System (EMS) and after-treatment system.

Q. In terms of customer support, what preparations did you do as part of the move to BSIV?

A. At Eicher, we are constantly increasing and upgrading our service network. In our dealer development program, we create awareness as well as ensure necessary steps are undertaken to increase competency levels may it be the move up to BSIV emission norms or for any other service requirement.

Q. How useful are the customers finding the Eicher Live fleet management solution?

A. The ‘Eicher Live’ fleet management solution offers class leading features with uptime management as one of the core services. It plays a crucial role in providing proactive uptime support to the customer. The uptime services in turn enable the service team to proactively schedule and plan repair and maintenance activities. The truck is thus optimised for higher revenue generation. The proactive services enable us to identify faults generated by the vehicle and schedule preventive maintenance. This leads to fewer unplanned stops. The service team is also better prepared to attend to the customer needs. In an unlikely event of breakdown assistance, the service team is well prepared. Availability of specific diagnostics information (fault codes) enables it to arrange for the right parts, tools and the right technicians to minimise downtime. The dynamic service reminders in case of mining trucks ensure a change in vehicle utilisation in-line with the customer needs.

Q. How was the performance of Pro 6000 and Pro 8000 series in FY2016-17? What is your expectation for growth in the current fiscal?

A. With Pro series tippers, in the mining segment, we increased our market share to 21 per cent in FY2016-17. Growth has been phenomenal till date, and in-line with the robust performance of the tipper segment. The Eicher market share stands at five per cent across different tonnage, power range and segments (applications). Our market share varies between 10 per cent to 12 per cent. The tipper segment drove heavy commercial vehicle sale last fiscal. The Total Industry Volume (TIV) grew by 27 per cent on account of construction, quarry, infrastructure and core sector projects such as road, ports, irrigation, railways and smart cities. However, demand on mining side was little subdued due to lower off-take of coal coupled with skewed demand for cement. In mining trucks segment, we have increased our market share to 21 per cent in FY2016-17. Eicher achieved a growth of 12.5 percent in volume terms, at more than 58,000 units against 52,000 units during the last financial year. The industry, in comparison, grew four per cent. Over the short-term, we see some challenges, and mainly due to pre-buying and customer postponing the decision to purchase due to the need for clarity of taxation upon GST implementation. Over the long term, demand is expected to pick up on account of the on-going infrastructure development initiatives, stricter enforcement of regulatory norms especially related to vehicle length for certain applications and the overloading ban. We expect to witness a growth of eight to 10 per cent. With wide range of tippers (from 16- to 31-tonnes), and tailor made offerings for various segments (applications), we are well placed to tap the rising potential in the construction and mining (tippers) industry. With the massive infrastructural push announced by the government for the financial year 2017-18, and the highest ever budget allocation of four-trillion across infrastructure sectors announced in the union budget, we expect the tipper market to touch 65,000 numbers in FY2017-18. We will continue to strengthen our position in the heavy-duty truck market,

Q. What are the export volumes like for the Pro 6000 and Pro 8000 series tippers?

A. Our exports volumes have improved over time. In FY2016-17, we recorded the highest ever export volumes at over 8000 units as compared to the export of 6512 units in the last fiscal. We command a strong presence in South Asia, and in some countries in Africa and the Middle East. We plan to leverage the distribution network of Volvo Group in Africa, the Middle East, South East Asia and in Latin America to drive exports. The new products that are being revealed now will also be adapted for export markets.

Trendline

The tipper segment drove heavy commercial vehicle sale last fiscal. The Total Industry Volume (TIV) grew by 27 per cent.

Defining Standards

Q & A

Rattan Kapur,

President, ACMA

Interview by: Anirudh Raheja

Q. What will be the effect of BSIV emission norms on the industry?

A. As far as BSIV emission norms are concerned, I would say that the industry is ready. The problem of fuel availability has already been addressed by the government. Most Indian companies have already adapted to BSIV technologies. BSIV, I feel, is good for India. The industry is ready for it too. The 2020 deadline for BSVI emission norms however seems too optimistic.

Q. Global players are expanding their base in India. What role will the Indian auto components players play?

A. Not only is the Indian market opening up, the world is also increasing its shopping list from India. Over a period of time, India has proved to be a market that has matured to a great extent on the quality aspect. The acceptability of Indian products has been rising even in difficult markets like Japan and Germany. It will be a matter of time that the whole world accepts us. Exports will be an important part of the business plans of most companies. As of date, out of our total exports of USD 13 to 15 billion, nearly 25 per cent is exported to the United States of America.

Q. What led to the publication of ACMA study report?

A. The study report reflects on the growth trajectory of auto aftermarket in the country. As per the study, the Indian aftermarket stands at around USD eight billion, and is expected to surpass USD 13 billion mark by 2020. As per the Indian Government’s Automotive Mission Plan 2026, the set target is to reach USD 32 billion. We are looking at the aftermarket to scale up in the next few years. I think it is becoming a part of everybody’s portfolio. It is also proving to be a de-risking portfolio, and is thus an important market. The aftermarket is here to stay.

Q. The unorganised part of the aftermarket is sizeable. How does ACMA look at it?

A. There are two aspects to it. A big chunk of unorganised market reflects upon an entrepreneurial spirit. As long as these companies produce genuine, safe and good quality products, there should not be an issue. The challenge is when unorganised players get involved in the production of substandard products. This largely happens, and in part because India is a highly price sensitive market. At every price point, you can find a market segment. Unfortunately, India has not mandated the standards of products to be sold in the aftermarket. If standards were mandated, there would be a mechanism in place to check the standards. The products would have to comply to those standards. When supplying to the vehicle industry, component manufacturers have to adhere to the auto industry standards. Nobody will take the risk of making the vehicle unsafe. We have been talking to the government for three years now, to make standards a mandate for the aftermarket. The government is serious. If one looks at the new Motor Vehicle Act, much stress is laid out on safety. We are in dialogue with the government.

Q. Counterfeiting is hurting the auto industry. How successful have you been in curbing it?

A. We did a study five years ago. The counterfeit market was as high as 36 per cent. It has now come down to five per cent. In the earlier study, counterfeiting was used in a broad sense. We have tightened the definition of counterfeiting. Counterfeiting is truly spurious as per the tightend definition, and accounts for five per cent. Consider the earlier 36 per cent, and the rest of the 31 per cent accounts for substandard products. The proportion, when one looks closely, hasn’t changed. There is thus a long way yet to curb substandard and counterfeit products.

Q. You spoke about defining the standards. How does that reflect on the role of ACMA?

A. It is essential to understand that the market is rapidly evolving. Our understanding of the market is also evolving. Earlier, the term counterfeit included substandard products. Those that are available with small retailers in markets like Paharganj and Kashmere Gate. Counterfeit now refers to fake or spurious products strictly. Products that do not comply with the Copyright Act, and with the IP Act. At this juncture, it may be worth mentioning that China is also dumping products into India. Curbing this is possible by mandating standards. It should be made necessary to show proof of compliance to standards at the customs. The raids we conduct to flush out spurious spares are collective raids. There is a committee in ACMA where all the member companies come together. ACMA conducts raids on their behalf. It is paid for by the members. ACMA has been conducting raids for several years now.

Q. What was the effect of demonetisation on the auto components industry?

A. There are some industries that have survived immense pressure. The four wheeler, two wheeler and agricultural equipment sector lost a big chunk of revenue in terms of sales from rural areas. Major transactions there take place in cash. Demonetisation led to buyer shrinkage. In the long term, demonetisation will go a long way in eradicating industry malpractices. Various sellers sell products at cheap prices in cash and disappear. It is difficult to catch them. Demonetisation will make it difficult for such transactions to take place. Trace-ability will rise when they are mandated to raise invoices. It would be much easier to catch these people, and to regulate the market. In many instances, they end up killing the taxation structure. They end up killing the industry too. Demonetisation has been accepted in the market.

Q. What was the effect of demonetisation on the aftermarket?

A. From an aftermarket perspective, the effect of demonetisation was based on the nature of transactions carried out. In the North, cash transactions are over 50 per cent. In the South, they are less than 20 per cent. Depending upon the amount of cash transactions, markets reacted differently. They were affected differently. Improvement in cash flow should improve market sentiments. I don’t think there are any more issues pertaining to market vibrancy. It is back to normal. The government and bankers today know who are doing cash transactions. At ACMA, we are pushing for digital transactions. We organised seminars at (ACMA) Automechanika to promote digital transactions and epayments.

Q. How do you look at the aftermarket in the eastern region of the country?

A. It is a vibrant market, especially from a commercial vehicle point of view. The hilly terrain leads to more wear and tear of vehicles. This has an effect on maintenance. East India market is set to become big with Assam as the focal point for warehousing. All the material from across India will move there before being transported further to various surrounding regions including the export markets of Myanmar and China.

Q. What change will GST bring about?

A. Products travel across various states. Much paperwork is involved in terms of sales tax and excise duty. GST will eradicate this in a big way. We as an industry have been struggling for long to conduct raids. Almost 500 raids are carried out every year at the retail level. It is possible to reach the distribution level but not the manufacturer level. With GST, it will be possible to reach the level of the manufacturer. My only hope is that GST maintains a level of 18 per cent or less. Above 18 per cent, it will hurt the industry, and may lead to counterfeiting and price rise. Once prices go up, the tendency to under cut and under sell increases. Especially, in the absence of legal papers. We have an abatement on Maximum Retail Price (MRP). Tax is paid on MRP. This abatement will stop once GST comes in. It is tax paid on MRP that makes a product expensive. In a price sensitive market like this, where there is a gravitational pull towards products, lacking quality consciousness, the two wheeler market looks the most vulnerable. If the product becomes more expensive, it will have an adverse impact. This will be led by the two wheeler market, and followed by the agricultural equipment market, commercial vehicles, and passenger vehicles.

Q. What are the programs and drives ACMA conducts?

A. ‘Safer drives’ is a big campaign we conduct. During the safety week of the Government of India, we participated for the first time. We held seminars, walkabouts, and campaigns. Even at (ACMA) Automechanika, we had a pavilion for safer drives. We are now consciously pushing people to use safer products. We also held a classroom for mechanics. Mechanics in batches of 30 were trained to use safety products. We are also building a digital catalogue of all aftermarket products. When one needs a product, he or she can send a query on the ACMA website. It will enable us to help them find a genuine product at a genuine price.

Q. Is the Cluster program a part of it?

A. The cluster program is completely different. It is about building competency in manufacturing. It intervenes at the shop floor level to make sure that requisite training happens at all levels to minimise defects. A part of this program concentrates on zero defect. To create awareness for safer and quality products, we constantly conduct road shows, take up kiosks in vibrant automotive hubs, and get company teams to educate people about spurious products. .

Q. What role does ACMA play in connecting suppliers with OEMs, and improve the ecosystem?

A. We try to find out from the OEMs what their requirements are. We talk to them. We consult them for visiting as delegates. We introduce our member suppliers, and help to establish a communication link, including inking of technical pacts. Such activities helps boost the technical capabilities of local manufacturers while understanding the needs of OEMs. We execute such activities for tier 1 suppliers with OEMs, and with tier 1 and tier 2 suppliers. There is a need to handhold them to ensure an improvement of the whole ecosystem. We have already developed a strong base of 80 tier 2 suppliers in Gujarat who are the preferred choice of OEMs.

Q. Does ACMA also engage with potential investors?

A. An ACMA delegation visited US to meet venture capitalists recently. The delegation reached out to companies developing technologies as well. Four members of ACMA have shown interest to engage with the venture capitalists. This is towards investing in new technologies. It is for the companies to find the right path.

Q. What is your view on electromobility from an ACMA stand point?

A. Looking at the issue of pollution, the future lies in electrification of vehicles. There will be need for technologies like quick charge. There is already a talk about setting up charging points, and building the necessary infrastructure. Solutions are being found to overcome challenges.

“My only hope is that GST maintains a level of 18 per cent or less. Above 18 per cent, it will hurt the industry, and may lead to counterfeiting and price rise.”

Trendline

Counterfeit now refers to fake or spurious products strictly. Products that do not comply with the Copyright Act, and with the IP Act.