Q & A
Executive Director – Commercial Vehicles, Tata Motors
Interview by: Bhushan Mhapralkar
& Anirudh Raheja
Q. How do you look at the FAME outlay in the wake of hybrid and electric CV proliferation?
A. The government has pushed the FAME outlay up slightly, but for a bus that costs nearly two crore rupees, it is not easy to pick up steam. Consider the financials involved in electric buses, and it does not look easy. Electric buses have a made a splash in China because of the near 100 per cent subsidy they get. It is unbelievable but true. Right now, we are not really getting tied down by that, but unless volumes build up, costs coming down is a distant dream. We are going to make 20 electric vehicles, put it all over India to create public awareness. We already have one bus running on alternate media, but that is a hybrid. It ran at different places including Delhi. It ran in the BEST (Mumbai) territory two years ago. We already have an order from MMRDA (for Bandra-Kurla Complex in Mumbai) to supply 25 buses.
Q. How is the response from transport undertakings to such vehicles?
A. To be frank, they are also looking out for directions. In Jnnurm II, BMTC (Bangalore) actually raised a demand for 25 buses, but when we shared the costs they conveyed that only 30-35 per cent of the costs were being borne by Jnnurm II scheme. So the amount that they had to shell out was still more than a crore rupees. The same may change quickly because of the pollution related problems. Especially in the hilly areas. Himachal Pradesh, I think, has placed an order for an electric bus. The volumes may be small but the idea of being futuristic is already there.
Q. You have launched the Signa range of trucks. Is it an upgrade of the LPT range?
A. We are moving into brands, which includes the Ace, Magic and the Prima. The Prima was followed by Ultra. In our main segment, we felt that the cabin needed a major uplift. The product had to be ready for the next 10 years. So rather than selling it as a 3118 and a 4923, we have decided to bring them all under a brand. The numbering like 3118 and 4923 will remain. So, if you see the cabin of the Signa, it may not be as good as the Prima, it will however equal or be better than most of the cabins available, and at a nominal cost increase. The powertrain will not change much and will be similar to what our 3118, 4018 and 4923 models carry. Additionally, it will be fitted with telematics as a standard feature.
Q. Would the Signa cannibalise the Prima?
A. Sales of the Prima LX are increasing and we are focusing a lot on tippers. Multi-axle trucks are still going slow. Exports are giving us 200 numbers. It was decided three years ago that the current cabin should be upgraded so that it looks as modern as the other new products. Many of our competitors are new but we have been in the market for six decades. The Prima’s cabin has got more weight and is much more sturdy. People might not buy Prima because of the cost of operations, and not because of the vehicle cost. The Prima will be very useful for those who want to transport heavy duty loads or cover a six-day trip into a three day trip. And, even if the Prime is successful, we cannot look away from our main range. It is necessary to acknowledge the fact that a lot of cabin sales are from the 3118. That is the segment that will move over to the Signa.
Q. There were no LCV launches in 2015 except below 3.5-tonnes. How do you look at this?
A. We launched Ultra range last year – the 812, 912 and 1012 models. We have launched the Ultra 1518 model at the Auto Expo 2016. It will be the first vehicle in the ICV range with a sleeper cab. It will be a complete walk through flat cabin with an extended load body. We will also have a narrow Ultra in the four-tonne and seven-tonne range. For the SFC 407 or LPT 407, we did not make big changes. There’s been no launch therefore. We showcased them at the last Auto Expo. The Ultra narrow truck on a four-tonne platform will be launched in FY17. We felt that a narrow cabin on a high vehicle will not look good, so we had to lower the wheelbase. The hierarchy will be Ultra, Signa and Prima. This is how the 9- to 49-tonne segments will be covered.
Q. The Ultra platform looks highly versatile. How far will it extend?
A. If you ask me, we can take the Ultra up to 25-tonne platform. We may not do that since the cabin will become too small. We are therefore looking at a B-cab design. The Prima range is already available with a B-cab design, which is typically used in a multi-axle truck. For a 25-tonne truck too we will be looking at a B-cab design. There will be a certain overlap for co-existence between the Signa and the Prima range. For deep mining applications they would certainly need the Prima.
Q. You showcased four construction trucks at Excon 2015. How do you think the industry segment is moving?
A. Last month, we grew by 20 per cent, which has come in after three years. While the M&HCV segment was growing, LCV was struggling. Now LCV is 12 per cent, M&HCV is 40 per cent and tippers are also growing. It think this quarter we will grow by 20 per cent. If we focus on the numbers, one of the developments in the last four months has been the growth in construction tippers. If you look at the M&HCV growth (which consists of tippers) till September, it hovered around 30 per cent. Tipper growth was zero. Consider the last 18 months up to October, and the tipper growth was zero. All the growth came from the cargo segment. Now, tippers have started to grow. We can also see a government effort on infrastructure and construction where road contracts are being executed, mining relaxation is gradually happening. I think that the next one year will be strong in terms of tipper sales. Like cargo, there was a pent up demand, which suddenly came in. The government is aware that the next wave of growth will come from public spending and not from private spending.
Q. When could we have Tata CVs with Automated Manual Transmission (AMT)?
A. There are two programs right now. We are currently working on an AMT for the Ultra range. I think it will be more useful in the start-stop kind of environment; in cities where short haul transportation happens. AMT may come on the Ultra platform buses first. This is because buses is where the maximum urbanisation is happening. We are also looking at automatic transmission for Xenon because of rising demand from our export markets like Thailand and Australia.
Q. Would Tata Motors also introduce start-stop technology in CVs?
A. Start-stop technology was introduced in the Tata Ace Ex. There was no demand for it. We decided to not put an extra cost when we saw that the market is not absorbing it. We pulled out. With focus on AMT, we will re-visit the start-stop technology later.
Q. With every new development at Tata Motors globally oriented, does the Signa hold export potential?
A. We are exporting close to 5000 vehicles every month, out of which 1200-1500 units are trucks. If you look at the Signa, from the outside it might look as an earlier cabin, but it has got better fit and finish. It has a new dashboard, and is more safer. We are starting with the 4923 tractor, 4018 and 3118. Once all the tractors migrate, we will stop producing the existing one. The Signa will replace the current LPS and LPT range. Then we will move to tippers and then we will move to 25 and 31-tonne multi-axle trucks. Over a 12 month period, Signa will be the mainstream range and Prima will be the upgraded range. Initially it will be the domestic market (for about 12 months). Exports will follow because the numbers here are pretty large.
Q. Do you see a future for hybrid trucks in India?
A. Not in the near future because of the higher cost of the vehicle. Such a technology will not be good enough to compensate the 10 per cent increase in (fuel) saving. Hybrid technology largely depends on regenerative braking, and in long distance vehicles, braking does not happen that often as compared to a city vehicle. Hybrid buses for city operations is the best; it has to brake at every signal. Because the bus stops often, regenerative braking is high. This could be an option for Xenon. Migration will however take time.
Q. When could we see the 40 hp version of the Magic?
A. The segment that the Magic is in has been struggling for sometime. This is where the nexus of financing default and low financing has hit the most. Financiers are not ready to give more than 70 to 80 per cent loan. Whenever a permit is involved, such things can happen. When defaults started happening, people just left the vehicles and walked away. Financiers are more cautious. Cargo still carries a positive reputation, and despite less business. In the SCV segment, I think, we have hit the bottom. Sales have started increasing. We will launch the Magic Mantra in this quarter(FY16 Q4). It will not suffer so much. It is a very good option for a school bus because it is a higher powered vehicle. Magic’s limitation today is its 16 hp engine with a top speed of 55-60 kmph. Magic Mantra will soon get a closed body version. The Magic today comes with a soft top. When it comes to carrying people in a city, students or staff, the Magic Mantra will fit the bill nicely.
Q. Is India a friendly market for the one who would like to become an entrepreneur?
A. Four years ago, it was too friendly when the financing was easy. The penalty for not paying installments on time was weak. India is still a business friendly market. As the economy improves, the loan availability will increase. If you ask me, Tata Ace was launched in 2005, and the M&HCV market saw correction in 2008, 2009 and 2010 and again in 2012, 2013 and 2014. The Ace saw the first correction after eight years. We had by then sold 1.5 million units already. In India, vehicles don’t disappear. They continue to be resold, which I think is still fairly encouraging.
Q. What about permit issues pertaining to public carriers?
A. Wherever passengers are involved, a permit is applicable. Permit is applicable even for a private bus. The situation, I think, will ease up as we move forward. A lot of state transport undertakings are willing to deploy more buses, but they don’t have the money for it. They are tying up with private partners even as they face issues like getting the requisite parking space. Bigger buses will see some revival because of the need to have better public transport. Smart cities will need public transportation. Smaller vehicles are more or less state driven. As the financing environment returns, this segment will pick up again. It is like a share taxi market. In Kerala, four-wheeler segment is more strong. It is like a taxi that is hired to go from one place to another. We sell close to 800 units every month, which is more than three-wheeler sales. We have already overtaken Piaggio. Our dialogue with the government continues to give legitimate results.
Q. The emission compliance goalpost seems to shift. How do you view it?
A. The BS IV emission compliance will be made mandatory nationwide in April 2017. Of the India permit trucks on the road hardly any is BS IV emission compliant. There’s is a lot of pressure on this. The Ministry of Road Transport & Highways (MoRTH) also took us into confidence. We also had a meeting at SIAM, and came to the conclusion that there is no sense doing BS V for two years. All the platforms have to be in production, and have to be tested. By skipping BS V we will actually save a lot of investment and time. Petroleum ministry has said that we will have the fuel by 2020. We have asked the ministry to supply fuel at least a year in advance. BS VI is a sophisticated technology and needs critical testing and validation. They are time consuming. Also, one cannot sell any fuel lesser compliant than BS VI once BS VI vehicles are out in the market. The country has to move 100 per cent to BS VI. We will start building BS VI compliant products by April 2020. We have asked for a permission to phase out products over a period of two years. The same was also done in Europe. What it means is that we have taken a huge challenge for investment, technical capabilities and testing facilities.
Q. How will that go down with customers where an SCR system could cost as much as an engine?
A. It is difficult to zero down on the costs for now, but there will be at least 25 per cent escalation. The move up to BS IV calls for a 10 per cent increase in the vehicle cost. Bigger BS IV trucks need after treatment whereas smaller ones don’t need it. For the next one year, we will see good demand for BS III vehicles till April 2017. The following year will be dull. As we will approach 2020, people will start advancing to BS IV vehicles.
Q. Will the Indian duty cycles differ from markets that have already graduated to BS VI?
A. The view that foreign companies are making BS VI in India and exporting is not right. For selling the vehicle in India, the technology cannot be copy pasted. A lot of software work is involved. It is going to be quite challenging.
Q. How are you looking at the van market that has the Winger? Would you introduce a new product?
A. A new vehicle will take time. In the case of the current Winger, we have recovered our investment. Over 7000-8000 units are selling every month. It is very popular as an Ambulance, and has overtaken the Force Traveller as an Ambulance. Traveller is selling more of 17 to 18-seater versions. They are the market leaders in that segment.
Q. Would vans play a crucial role as feeder service vehicles?
A. The customer in India still seems to prefer a semi-forward look. Van has a box-type look. The segment will not become as big as it has been in Thailand and Indonesia where you see vans transporting 6-7 people.
Q. Which alternate fuel do you think will be the most sustainable? Would it provide a better passage to BS VI?
A. Rather than ethanol, I think LNG is a good option. At the 2014 Auto Expo, we showcased a LNG powered tractor trailer. While CNG is there, for long haul trucks, we believe LNG could be a good option. Whether it gives a better route to BS VI, I cannot comment on. Diesel has not gone off completely from any country and for long distance transportation it will still be viable. When you move to BS VI, data will show that the performance of diesel as compared to that of a petrol is equal in some parameters and slightly inferior in some parameters to petrol. This is not the case with BS III diesel. As you keep going up, the question of diesel being called a bad fuel does not arise if you discuss it scientifically.
Q. Diesel vehicles are under scrutiny; are looked upon as polluting.
A. Today, new (diesel) vehicles have been banned. I think this is defeating. Delhi is already at the BS IV emission norms level. In the discussion we had with the ministry, they have accepted this. My view is that they are already working on a notification for which they are consulting a lot of people; to finalise the incentive for scrapping and other things for which they are actually looking for experts to advice them.
Q. How are the suppliers and dealers looking at the move up to BS VI?
A. It is not too much of an issue with the dealers. There will be a lot of changes at the after service. On board diagnostics, I think, will come in a phased manner. In Europe, OBD implementation was phased over two years. We are running a big transformation at the dealerships. We are encouraging them to invest into hi-tech and better reception facilities, to give a better consumer experience. With the vendors, suppliers involved with engine and after treatment like Bosch and Delphi, will have a major impact. Some enterprising vendors can actually take the lead, for which OEMs will be happy to outsource rather than try to do everything in-house. They can also sell the product to many OEMs, which would give them the chance to reinvent an engine.
If you look at the Signa, from the outside it might look as an earlier cabin, but it has got better fit and finish. It has a new dashboard, and is more safer. The Signa will replace the current LPS and LPT range.
We are running a big transformation at the dealerships. We are encouraging them to invest into hi-tech and better reception facilities, to give a better consumer experience.