Tata Motors has launched the country’s first Bio-CNG (bio-methane) bus at the recently concluded Bio-energy programme – ‘Urja Utsav’. Designed and developed by Tata Motors, the bio-methane engines (5.7 SGI & 3.8 SGI) for LCV, ICV and MCV buses were displayed at the event. Alongside the engines, the company showcased the Tata LPO 1613 with 5.7 SGI NA BS-IV, IOBD-II compliant bus. The Tata LPO 1613 is already in operation by Pune Mahanagar Parivahan Mahamandal Limited (PMPML). Organised by the Ministry of Petroleum & Natural Gas, the launch took place in the presence of Minister of Ministry of Petroleum and Natural Gas, Dharmendra Pradhan and Minister of State with Independent Charge for Power, Coal, New and Renewable Energy and Mines, Piyush Goyal. Averred Girish Wagh, Head, Commercial Vehicles Business, Tata Motors, “Tata Motors has been at the fore front in pioneering latest technologies and providing smart city solutions in the commercial vehicle industry. We are delighted to present yet another product with innovation in alternate fuel technologies, to cater to the need for a greener country.” “The use of Bio-CNG will contribute in a positive manner to the Smart Cities proposition of keeping them clean and is a good option for wet garbage management,” he opined. Speaking on the Bio-methane bus development, Rajendra Petkar, Head- Power System, Engineering, Tata Motors said, “The showcase of the Bio-Methane bus is a step towards developing environment friendly vehicles. This gas, which gets produced out of natural degradation process, escapes into the atmosphere unused. However, if this is trapped and used in engines, it reduces the net impact on environment and at the same time produces useful power.” Having pioneered the introduction of natural gas vehicles (CNG) in the country, for close to two decades, other initiatives related to CNG engines include the likes of sequential gas injection technology, skip fire, plug type coils, long life spark plugs and longer oil drain intervals.
Last fiscal saw the Indian bus industry change; experience growth and excitement.
Last fiscal was a good year for the Indian bus industry. The industry witnessed growth followed by the enforcement of the bus body code (AIS 052), and the school bus code (AIS 063). Posting good growth, the industry also witnessed the arrival of sleeper bus code (AIS 119), which is claimed to be a world first. Progress was also achieved in tarmac and double-decker bus code draft. Experiencing buyout times on the back of good orders from government run State Transport Undertakings (STUs) and City Bus Undertakings (CBUs) as well as private bus fleet operators, the bus industry grew at an average 10 per cent last fiscal. Apart from the homologation of a sleeper coach built by Bangalore-based bus body builder (converter), Veera Vahana, under the new sleeper coach code in April 2017, the bus industry in India saw some exciting developments during the last fiscal. At Busworld India 2016, Belgaum-based Alma Motors displayed a tarmac coach with aggregates like engine, gearbox and axles sourced from tier suppliers like Cummins and ZF. Pointing at empowering key bus body builders like Veera Vahana, Alma, JCBL and others, the bus code, it seems, has provided the much needed direction to the Indian bus industry it looks like. Expressed Prashant Kakade, Manager & Co-Ordinator MDC, Central Institute of Road Transport (CIRT), that the bus code has had an influence of turning bus body builders into bus manufacturers. “They are now looking at sourcing aggregates from key suppliers to make their own bus that complies with the bus code regulations”.
If bus body builders continued to gather speed and mass, traditional bus manufacturers like Tata Motors, Ashok Leyland, Volvo Eicher Commercial Vehicles, and SML Isuzu did brisk business as well. Operating at the premium end of the market, global bus makers like Volvo and Scania did well. The premium bus market, driven by rear-engine buses, hovered around 1000 units last fiscal. At busworld India 2016, in an effort to retain its leadership position in the premium bus market, Volvo Buses India unveiled a two-axle 12 m long coach with a locally made 8-litre common-rail diesel engine. This engine is made at the Volvo Eicher engine joint venture at Pithampur, Indore, called the Volvo Eicher PowerTrain. The 5- and 8-litre engines made at this plant, which mirrors the processes and layout of Volvo’s Skovde plant in Sweden, are supplied in Euro6 guise to many European locations of Volvo. Said Akash Passey, Senior Vice President – Business Region International, Volvo Bus Corporation, “The inclusion of a locally produced engine addresses the demand of our customers for localised products, and would reflect on the cost and maintenance of the vehicle.” Akash stressed upon taxation as one of the key reasons why operators take long to achieve Return On Investment (ROI) in the case of premium buses. This is also said to be the reason why many city bus operators are not very keen to procure premium, low-floor rear engine buses.
Premium players eye mid-premium positions
To make a compelling case for buyers, Scania took an ethanol-powered bus route to the market. Its over three years after the first ethanol-powered low-floor 12m-long city bus began plying at Nagpur. Since then, the Swedish manufacturer is working towards supplying 55 bio-fuel city buses to the city of Nagpur. If, and how viable they are, will be known over a period of time. In a bid to tap into the emerging mid-premium position, which according to Joerg Mommertz, Chairman & Managing Director, MAN Trucks India, offers an opportunity to better specifications than the domestic budget producers, global bus makers have been introducing products while homegrown players like Tata and Ashok Leyland up their ante. In association with Alma, MAN introduced a Mammoth front-engine 12 m luxury coach in early 2016. Volvo has been pushing its UD mid-premium brand of city buses in India. It recently received an order from the twin cities of Hubli-Dharwad. Dharwad features on the Central government’s scheme of ‘smart cities’, which promises to overhaul the infrastructure and make cities ‘world-class’. Tata Motors bagged an order to supply 25 vestibule buses worth Rs.50 crore to Hubli-Dharwad in January 2017. The order followed a bigger order from 25 STUs and CBUs in September 2016 to supply 5000 buses, representing a healthy growth of over 80 per cent over last year as far as the order book went.
STUs and CBUs as growth drivers
In FY2016-17, STUs and CBUs emerged as the key bus industry growth drivers. A big surge in STU orders was witnessed last fiscal, and after a gap of nearly four years, indicating renewed focus of various state governments and city councils on public transport. With the overall commercial vehicle market in India estimated to be 715,000 units, buses make up roughly 20 per cent of it. The Indian (medium and heavy) bus market grew 7.64 per cent in FY2016-17 with the sale of 47,262 units as against the sale of 43,909 units last fiscal. The light bus market grew 3.94 per cent with the sale of 50,864 units in FY2016-17 as against the sale of 48,936 units last fiscal. Leave for the 1000-unit premium rear engine bus market, and a small chunk of rear-engine premium city bus market (that saw the arrival of a new player, JBM last fiscal) led by Volvo and Scania, the Indian bus market by and large is made up of budget mass volume buses. It is here that Tata and Ashok Leyland lead. They are followed by Eicher and SML Isuzu and others. Prominently front-engine oriented, this end of the bus market is driven by low acquisition cost, fuel efficiency, service-ability and low cost of operation.
On the back of good orders, Tata Motors grabbed the lead from Ashok Leyland in FY2016-17 as the number-one bus maker in India. For some years, the lead position separated the two by a minuscule gap of one-per cent. Said Ravi Pisharody, Executive Director – Commercial Vehicles, Tata Motors, “We clocked a growth of 22 per cent in FY2016-17 against an industry growth average of 10 per cent.” In the pursuit of higher profitability, Ashok Leyland pursued a strategy to exit some of the State Transport Undertaking (STU) businesses. Expressed Vinod K. Dasari, Managing Director & CEO, Ashok Leyland, “We decided to concentrate on innovative products.” Ashok Leyland’s stress on innovative products is not new. In 2014, the company introduced a front-engine flat-floor city-bus called Janbus. Providing a modern, albeit front-engine alternative to the low-floor rear engine premium city buses, the Janbus proved popular because it cost almost half of what a Volvo city-bus costed at an estimated Rupees one-crore. In addition to the lower acquisition cost, the Janbus was engineered to carry more people, and promised carriage of people at a lower cost. With AC optional, the bus, offering single-step entry, came equipped with an Automated Manual Transmission (AMT), an India first in buses.
With the bus codes influencing the Indian bus market during the last fiscal, much technology found its way into Indian buses. AMT has proliferated since. ABS has become standard on heavier buses, and also air suspension. The market for AC buses, including retrofitment grew steadily last year. It is an estimated 20,000 and 25,000 units strong according to Pramod Verma, Vice President, Sphere Thermal Systems. It was between 12,000 and 14,000 units five years ago, quipped Verma. The demand for AC can be linked with the rising market demand for comfort and refinement. If the demand for comfort and refinement drew the demand for lighter AC buses for school, staff and tourist application in FY2016-17, many government transport undertakings – CBUs, under the Faster Adoption and Manufacturing of Hybrid and Electric (FAME) vehicles scheme, took out tenders to procure hybrid and electric vehicles. Under the aegis of the central transport minister, Nitin Gadkari, two 9m-long buses refitted with electric propulsion system were introduced in the capital city of Delhi to ferry the members of the Parliament. Tata Motors will soon deliver 25 diesel hybrid rear-engine low- and flat-floor city buses to the city of Mumbai. These mirror the CNG hybrid Tata Hispano city buses that ply at Madrid. Late last calendar year, Volvo delivered two diesel hybrid city buses to Navi Mumbai against an order for five such buses, making it the first manufacturer to supply a hybrid city bus in India. This bus is said to cost Rs.2.3 crore against the Tata Hybrid city bus, which is claimed to cost Rs.2 crore. High acquisition cost continues to be a deterrent despite a 50 per cent subsidy offered under the FAME scheme. To be precise, there is the challenge of gap-funding, which will need to be addressed.
With electric vehicle infrastructure in India lacking, hybrid buses make ample sense. CBUs however are said to be already looking at electric buses! Last fiscal saw CBUs put out tenders for the procurement of electric buses under the FAME scheme. Perhaps anticipating this, Tata Motors, at the Auto Expo 2016 premier fair, displayed a 9m electric bus based on its Ultra platform. JBM in association with Solaris displayed a 9m electric bus with a pantograph. Not to be left behind, Ashok Leyland, which owns Optare, unveiled a 9m electric bus called Circuit in early 2017. The move up to electric buses traces its roots in the first phase of emission reforms in 2008, which led to Delhi city buses being retrofitted with CNG almost overnight. Most Mumbai city buses also run on CNG. CNG however has posed limitations in terms of availability and infrastructure. The operating costs of CNG buses are proving to be higher than LNG. Promising to overcome to limitations posed by CNG, Tata Motors recently showcased a LNG city bus at Trivandrum.
As government run STUs and CBUs continue to call for modern yet cost effective buses, private operators continue to up the efficiency of their operations by deploying technology and modern buses. For private bus operators, complex bus rules and high taxation structures, which differ from state to state, continue to be a challenge. Business for them comes from government contracts, corporate staff transportation, tourist transportation, and from the transportation of school children. They accurately map the flow of people such that school and staff bus operators render to tourist transportation during weekends. Demand for large underfloor storage compartments in buses is on the rise when it comes to heavier, long-haul tourist buses. This is also driving the the need for powerful engines. With infrastructure improvements, the number of people travelling by bus continues to rise. The number of consignments transported by buses is also increasing. It serves as a good secondary earning medium. Especially during off-season. Expressed B Anil Baliga, Executive Vice President – Bus & Application, VE Commercial Vehicles, “A lot of the operator profitability comes from cargo.“
Comfort and fuel efficiency improvements
Increasing STU exposure, companies like Eicher are deploying technology to improve NVH and comfort on front-engine buses. Eicher is one of them. Said B Anil Baliga, that their focus is on NVH of front-engine buses. On the subject of high preference to front-engine buses in India, Baliga mentioned, “Indian operators are smart. They know their Return On Investment (ROI) very well. The trick lies in selecting the right route and the right bus.” The enforcement of BSIV emission norms from April 01, 2017, has ensured that most buses come with a common-rail turbo-diesel engine. Most heavy buses come with SCR after-treatment technology. This has had a definitive effect on acquisition cost, and operating complexity, what with the need to opt for annual maintenance contracts with authorised dealers rather than depend upon private garages that are much cost effective. With fuel efficiency at the forefront of operator equations, it will not come as a surprise that Daimler India Commercial Vehicles (DICV) is aluminium extensively in the building of its bus bodies. Use of such a technology is also expected to keep it ahead of its competitors, and body builders that are moving up the value chain. Taking advantage of the bus code, bus body builders (convertors) like Veera Vahana, JCBL, Alma Motors and others are investing to turn into bus manufacturers by procuring key aggregates like powertrain, suspension, etc., from the respective tier suppliers. Signalling bus industry transformation, the growing equation between convertors and aggregate manufacturers is starting to spring surprises. At Busworld India 2016, Alma Motors displayed a tarmac bus with aggregates procured from tier suppliers like Cummins and ZF.
If bus body builders are turning into bus manufacturers, CV majors like Ashok Leyland and Tata Motors are concentrating on exports for growth. T Venkataraman, Senior Vice President – Global Bus, Ashok Leyland, puts the domestics and export sales ratio at 58:42 as far as his company is concerned. Buses made by his company are exported to the Middle East, SAARC and African markets. In addition to this, Ashok Leyland also produces buses at a facility at Raas Al Khaimah in the Middle East. This plant has a capacity to produce 1200 units per year, and is helping the company to cater to the African markets. Ashok Leyland is also exporting Euro5 buses to Ukraine as well. Tata Motors is also applying thrust on exports. It exports buses to various African markets, Russia, the Middle East, and other destinations. The company claims to have achieved a leadership position in the medium bus segment in the Middle East. Eicher exports buses to SAARC markets; to the Middle East and African markets. Similarly, SML Isuzu exports staff, school and luxury buses to SAARC and African markets.
Light bus market
With the participation of Japanese players like SML Isuzu, the light bus market is transforming. Tata Motors continues to lead this market. Its lighter buses flaunt quality bodies built by Marcopolo. Daimler India Commercial Vehicles is BharatBenz lighter buses are also finding good acceptance in the market for staff and tourist bus transportation. A strong player in this segment is SML Isuzu and Eicher. Both has there own bus body building plants. Both have a considerable presence in the school bus sector. A pleasant change in the school bus market is Ashok Leyland’s Sunshine. Claimed to be the first bus to comply with roll-over crash norms, the bus saw the company seek the feedback of students, parents, school authorities, drivers and others. Stress was laid on minimising blind spots and offer a cheerful travel experience. The interior of the bus is thus colourful; there are safety elements built in, and the seats employ anti-bacteria fabric. With the Nissan collaboration behind it, Ashok Leyland is expected to bring out new products in the LCV people mover segment. It currently has the Mitr. A 8 metre-long version of the Mitr will be launched soon.
With crash norms expected to roll out in next fiscal, and the move up to BSVI emission norms scheduled for 2020, the Indian bus market has only one way to go – to advance quickly to close the gap with buses that are offered in the advanced market at a fraction of the cost. The export of 12m rear engine inter-city bus by Volvo to Europe has proved that there is a distinct price advantage in buiding a world-class bus in India. Initiatives like sleeper and double-deck coach codes by the government is empowering bus body builders to turn manufacturers. This spells good for the growth of the Indian bus industry even as the traditional CV manufacturers look at increasing their reach into the international markets. It is not for nothing, that the Indian bus market is expected to grow at a CAGR of 10 per cent by 2020. It is all about progressing demand, value and luxury after all.
As part of the ongoing restructuring at Tata Motors, Girish Wagh, Head of Product Line, Medium & Heavy Commercial Vehicle (M&HCV) has been elevated as Head of the Commercial Vehicle (CV) business unit. Girish Wagh replaces Ravindra Pisharody, the latest in line of a series of top exits from Tata Group companies. Girish Wagh takes charge with immediate effect, and will work closely with Ravindra Pisharody, to ensure a smooth transition according to Tata Motors’ press statement. Known for playing a crucial role in passenger vehicles business unit at the company, Wagh is credited with rolling out products like the ‘Tata Indica’, and ‘Tata Nano’. Especially in case of the latter, the world’s smallest and cheapest car (Nano) that made it to the list of milestone projects for the company. Leading up to the top post, these credentials are known to have been further bolstered by Wagh’s contribution to the commercial vehicles business unit. It is here that he headed the ‘Tata Ace LCV’ project, a top selling brand for the company today. Wagh only recently moved out from the passenger vehicles division to the commercial vehicles division. His replacement as the Head of Product Line – M&HCV is expected to be announced in due course of time. Until then, Wagh continues to oversee the related scope of responsibilities. An old hand at Tata Motors, Wagh joined the Original Equipment Manufacturer (OEM) in 1992. Back then he was selected on campus from a premiere institute, having enrolled under a manufacturing programme. Having spent 25 years of his entire career at Tata Motors, Wagh rose through the ranks to eventually attain the top post. He takes over from Pisharody at a critical juncture, with Tata Motors undertaking a massive transformation process. As part of the process, about 1400 people are known to have been sacked, with various roles and responsibilities for key executives being revised. The process that started on April 01, 2017 is part of an in-house project, Organisational Effectiveness or OE.
Tata Motors has announced the departure of Ravi Pisharody from the company. Executive director of the commercial vehicles business of the company, Pisharody joined Tata Motors in 2007 as Vice President – Commercial Vehicles (Sales & Marketing). On the board of various Tata Motors Group Companies, Pisharody steered the Tata Motors’ commercial vehicle business through the lean period of 2008-09. Elevated in 2012 as executive director, he revamped the entire commercial vehicle fleet, including the Signa range of value oriented HCV truck range. Well aware of the price sensitive Indian commercial vehicle market, Pisharody was instrumental in the company expanding its product portfolio and overhauling the dealer network to be able to maintain its leadership position in the wake of rising competition. Driving hybrid, electric and LNG developments with an emphasis to do as much in-house in order to keep control over processes, quality and costs, Pisharody play an important role in roping in action hero Akshay Kumar as the brand ambassador. Under his leadership, Tata Motors regained the leadership in buses. The defence vehicles business also grew under Pisharody’s leadership. His exit citing personal reasons comes as a big surprise. Ironically, it also comes at a time when the company is undergoing restructuring. Pisharody’s exit also comes at a time when the commercial vehicle major has see its market share drop, and Mahindra snatch the lead in small commercial vehicles. Pishraody, along with the new MD Guenter Butschek, contributed in a new mid-term goal that envisaged Tata Motors to be among the top three commercial vehicle makers by 2019.
Post the transition to BSIV, Tata Motors is eyeing strong growth.
Like many other commercial vehicle manufacturers, demonetisation affected Tata Motors too. The end of FY2016-17 marked not just the end of a tumultuous period, it also marked green shoots. For example, buses did exceedingly well. For Tata Motors, they posted a growth of 22 per cent against an industry growth rate of 10 per cent. This led the company to grab the lead in the Indian bus market. LCVs also performed well for Tata Motors. Looking at a new period that does not come often, and will perhaps never come again, Tata Motors is looking up to an exciting future. According to Ravi Pisharody, Executive Director – Commercial Vehicles, Tata Motors, the CV maker is confident of infrastructure revival helping it to grow. It is also looking at growth coming from the push for electric and alternate fuel vehicles. With teams in place, and post the significant structural changes to assume a leaner form, the company is exerting a good deal of thrust on exports as well.
The Ultra, according to Pisharody, is in the sweet spot. It is helping the company, along with the Prima, to drive exports. Export volume accounts for 17 to 18 per cent of the total volume, and is expected to go up to 25 per cent. Keen to offer the lowest cost of ownership, Tata Motors, in FY2016-17, saw the M&HCV segment shake and rattle. A segment where its new age products, Signa and Prima, enjoy a considerable clout. The months of April and May brought good growth to M&HCVs whereas the months of June, July and August proved to be weak. The reason, said Pisharody, could be attributed to GST. “GST started doing the rounds, and the PMO and the finance minister began talking about its implementation from April 2017. This seems to have led to lacklustre performance of M&HCVs in June, July and August last fiscal on the back of uncertainty, as CV buyers, hoping that prices will fall, decided to postpone their purchase. The talk of a tax structure of 18 per cent would entail a drop in prices by 8 to 10 per cent,” he expressed. The M&HCV segment started gaining velocity in September, and because of the good monsoon. In October 2016, and at the start of the festive season, the M&HCV segment recorded the highest growth in FY2016-17.
In November 2016, the effect of demonetisation was most felt in north and west, the markets where Tata Motors enjoyed the most exposure. “For a few days, the CV industry was literally stranded on the road,” opined Pisharody. Pointing at the way the transport industry works, Pisharody said, “A truck driver carries an amount of cash, which the driver and owner figure out as necessary.” The industry declined over the next two months. Tata Motors’ sales declined 30 per cent in comparison to October, and 15 per cent in comparison to the corresponding month of the previous financial year. The same situation prevailed in December 2016. In January 2017, the effect had vanned.
Despite the Environmental Pollution (Prevention and Control) Authority for Delhi & NCR (EPCA) exerting its stance, it was expected that February, March and April 2017 would witness pre buying. An amount of pre-buying did take place. Tata Motors however, took a balanced approach according to Pisharody. This ensured that the CV maker did not carry much inventory into March 2017. “We looked at precedence, when vehicle manufacturers were allowed to sell their existing stock, and not manufacture it after the cut-off date. The Supreme Court judgement was surprising,” expressed Pisharody. He said further, “Our strategy works around dealers carrying a stock of 30,000, all segments included, at the end of March. It amounts to one month of stock, and something which the dealer is able to carry into the next month. In this case, into April.” Production of BSIII CVs was immediately cut down on March 29, 2017, by Tata Motors. More impetus was laid on BSIV vehicle production, which the company was already ramping-up. Attention was also paid to help dealers to liquidate their stock.
What made it important to help the dealers liquidate their stock was the sales tax component already paid. Taking back dealer stock would have meant losing the paid tax component. “We were largely successful in liquidating the dealer stock,” stated Pisharody. Over a off-take and retail of 30,000 in February 2017, the March 2017 off-take was only 36,000. Tata Motors did not push inventory, and the figure the company settled for in March 2017 was lower than March 2016. In March 2017, the company witnessed solid retails of between 51,000 and 52,000. Dealer stock of BSIII vehicles according to Pisharody was very low as a result. It was between 3000 and 4000. Big trucks amounted to less than 500. At the plant level, the company incurred a stock of 15000 CVs.
Getting rid of the inventory
To get rid of 15000 BSIII CVs, Tata Motors is looking at export markets. It is also looking at aggregates to be sold as spares. Putting the company at a disadvantage when it comes to market share in March, Tata Motors reported a wholesale volume of 14000 as compared to a retail volume of 22,000-23,000. Out of the 15000 BSIII CVs left with Tata Motors, the number of M&HCVs, according to Pisharody, is 4000 units. He informed that discussions are on to seek a legal remedy, and that the government is supportive. Upon analysing, Tata Motors found out that 8000-8500 units (out of the 15000 BSIII vehicles) could be exported to markets like Sri Lanka, Nepal and Bangladesh as they are. Considering a monthly export of 5000 to 5500, it would take the company four to six months to get rid of the BSIII stock opined Pisharody. Of the remaining vehicles (that are not exported), Tata Motors plans to convert to BSIV. An ICV like the Tata 1109, explained Pisharody, can be converted to BSIV with a nominal cost of five per cent. Conversion of such vehicles has already begun. In case of vehicles that would pose a conversion challenge in terms of efforts and expense, Tata Motors is moving slowly. While hoping that a legal remedy is available to dispose them, the company is also looking at cannibalising high value items like gearbox, tyres, etc. This would help it to fulfill its long-term service obligations.
Beginning of a new period
Tata Motors is looking at FY2017-18 as a completely new period. The product performance equation in comparison to the competition will change according to Pisharody. The price positioning as well as customer eligibility will also change, said Pisharody. Terming the company as a CV market leader, and futuristic in its approach, Pisharody averred, “We will cater to price conscious as well as performance conscious customers.” The company will bank on a dual strategy as the new period reveals itself. For lower powered engine of up to 160 and 180 hp, the company is looking at EGR. With an overlap between 160 hp and 180 hp, Tata Motors is looking at deploying SCR technology on higher powered CVs. “All Tata engines have EGR,” informed Pisharody. He said, “Look at the 497 engine for example, and it is equipped with an EGR. The new three and five-litre engines that power the Ultra will deploy EGR. Two-axle trucks and lower powered buses will be equipped with EGR technology. For muti-axle heavier trucks, SCR technology will be deployed.”
If the stress on SCR technology hints at an attention to BSVI emission norms, Tata Motors is making a big jump in technology. It is doing so with an intention to achieve benefits like fuel economy, reliability and lower maintenance costs. Pisharody may expect higher resale value to come in once the migration to new (BSIV) technology takes place, and on the back of fuel, which will be different from what was available until now, the fact is, the next quarter looks lacklustre. It is something that Pisharody is well aware of. Especially on the back of some pre-buying in February and March. With GST scheduled for July 01, 2017, an amount of uncertainty is expected. Uncertainty is expected go down in the second quarter of FY2017-18 according to Pisharody. He opined that bus and SCV sales in July and August are expected to be much better than they were during the corresponding period last fiscal. Buses, he quipped, are already on SCR. As 13 Indian cities moved up to BSIV emission norms in 2010, Tata Motors equipped buses and urban application CVs like garbage compactors (on 1621 platform) with SCR technology. SCR technology for Tata Motors is therefore not newfound.
EGR vs SCR
Ramping up production of BSIV CVs, the company has limited the deployment of SCR tech to Tata Cummins engines. The four-cylinder engines that Tata makes, will continue to be equipped with EGR. With Cummins, said Pisharody, Tata Motors is enjoying access to the latest and the most modern technology. Apart from SCR equipped engines, Tata Motors will also source EGR equipped engines from Tata Cummins in the 150 to 200 hp power range. Confident of the GST elevating the efficiency of the logistics industry (by doing away with border checks), Pisharody opined, “The strategy is to equip a certain range of engines with EGR, and a certain range of engines with SCR.” Girish Wagh, Head – Project Planning & Programme Management, M&HCV, Tata Motors, explained that they have acquired good global and local experience from the use of EGR and SCR technology. “For light-duty applications of up to 150 and 160 hp, EGR can do the job, and would entail lower costs,” he mentioned. SCR technology, according to Girish, makes sense for engines that are powerful as it will provide better fuel economy. “Beyond 180 hp, liquid economy of SCR is better than EGR”. With the use of SCR engines, Tata Motors is eyeing the twin advantage of lowest cost of operation and longer engine life. Well aware that the move to BSVI emission norms will make SCR essential, BSIV trucks with SCR techlogy according to Pisharody will command good resale value.
With the engine governed electronically, Tata Motors has had an opportunity to add value. It thus developed vehicle acceleration management system that filters driver input to ensure optimum efficiency and longer aggregate life. Tata Motors has also developed fuel economy switch, the mode of which the driver can select depending upon the duty cycle and usage condition. A host of technologies have been developed by Tata Motors to increase aggregate life. Efforts to improve ride and comfort were undertaken on the basis of the feedback received. The company has developed a modular chassis frame, which aligns with multiple applications. A new 6.5-tonne front axle has been developed to facilitate higher load carrying capability. Revealed Girish that 14000 common-rail trucks are already plying in India for the last seven years, and have provided a good learning opportunity. The company, averred Girish, is deploying 1800-2000 bar pressure common-rail systems and DOC for EGR application. The price differential between BSIII and BSIV Tata CVs is in the region of 10 per cent. For the higher amount paid, the operator is getting much better value mentioned Pisharody. He said, “We are offering better AMC for SCR equipped vehicles.” Keen to ensure that Tata CV operators enjoy lower total cost of ownership, the company will market AdBlue solution as a Tata brand through 3000 outlets and fuel stations.
Confident of infra revival, and the rising demand for electric vehicles (a tender for 100 electric-buses has been floated at Pune, and for at least six buses in Himachal Pradesh), Tata Motors, expressed Pisharody, is expecting new regulations like AC, advanced crash norms and CAFE to call for attention in the next two years. “Powertrain and vehicle teams at Tata Motors are in place for BSVI regulations that are due to come in force by 2020,” Pisharody signed off.
After a tumultuous last year, the CV industry is looking at a rare new period.
Story by: Ashish Bhatia
Supreme Court’s judgement to stop the sale of BSIII emission compliant vehicles on April 01, 2017, led to an unprecedented situation. CV manufacturers and dealers were left with an estimated inventory of 96,700 (and 40,048 three-wheelers) BSIII emission compliant CVs as on March 30, 2017, amounting to a sum of Rs.2500 crore approximately. With the Supreme Court order clearly stating that on and from April 01, 2017, such vehicles that are not BSIV compliant shall not be sold in India by any manufacturer or dealer, led CV industry stakeholders to look at quick ways of off-loading as many BSIII emission compliant CVs as they could in a short span of three-to-four days; from the time the Supreme Court gave the order and from the time BSIV emission norms came into force on April 01, 2017. The scope of the Supreme Court judgement can be had from the fact that it ordered all the vehicle-registration authorities under the Motor Vehicles Act, 1988, to not register such vehicles on and from April 01, 2017, that do not meet BSIV emission standards, except on proof that such a vehicle has already been sold on or before March 31, 2017. It was no secret that BSIV emission norms will come into force from April 01, 2017. The CV industry knew it. What the CV industry did not know, claimed an industry source, was if they should discontinue manufacturing BSIII vehicles such that there will not lie a single unit with them or their dealers on April 01, 2017. He drew attention to the fact that manufacturers were entitled to manufacture BSIII emission compliant vehicles till March 31, 2017. He also drew attention to the Centre’s response on pleas filed by Bajaj Auto and Environmental Pollution Control Authority (EPCA) in the Supreme Court, that the sale and registration of BSIII vehicles can continue after March 31, 2017, and the cut-off applies to manufacturing only. During the March 24, 2017, hearing, claimed an industry source, the court had considered allowing registration of BSIII vehicles by imposing a compensatory cess. The Centre’s response is said to have been based on two earlier instances of upgrading to BSII and BSIII emission norms respectively. Then, the sale of existing stock was allowed.
Bone of contention
Mentioning in its order that the health of the people of India is of greater importance than the losses the auto industry would suffer (sic), the Supreme Court was not impressed by the argument that manufacturers be allowed to sale BSIII vehicles even after the BSIV regulation was implemented.
Claimed an industry source that the ministry of transport issued a notification on August 19, 2015, to switch to BSIV emission compliant vehicles on April 01, 2017. It did not however clarify whether production of BSIII vehicles would have to be stopped, or also their sale. Interestingly, the Supreme Court did not fail to observe the fact that an expenditure of Rs.30,000 crore was incurred by refineries to produce BSIV grade of fuel. The Court in its order stated that manufacturers failed to take pro-active steps despite being aware of the timelines. Much confusion prevailed until the Supreme Court issued an order on March 28, 2017, to stop the sale of BSIII vehicles on March 31, 2017.
Dealing with the impact
Left with no choice, CV industry stakeholders came up with the prospect of fire-sale. With the Court order coming out three-to-four days before April 01, 2017, the auto industry, and not just the CV industry saw fire-sale as a promising prospect, which is not surprising. Many two wheeler manufacturers too resorted to fire-sale of their BSIII vehicles as well.
Expressed Vinod K. Dasari, Managing Director and Chief Executive Officer, Ashok Leyland, and President, Society of Indian Automobile Manufacturers (SIAM), that they are looking at exporting the leftover (BSIII vehicles) inventory to emerging markets, currently complying with BSIII norms. Claimed an industry source that those (vehicles) that are left behind will be dismantled. Some of the aggregates could be rescued. Alternatively, the vehicles could be upgraded to BSIV if possible. A statement issued by Mahindra & Mahindra announced that the Group is ramping up BSIV vehicle production. The OEM, the statement read, is also exploring options within the framework to minimise the impact. The brisk discount sales and incentives CV makers offered to off-load BSIII vehicles in the three-to-four days costed them in the region of Rs.2500 crore, claimed an industry source. According to a report by research firm Crisil, companies sold a little over half of their BSIII inventory by March 31, and have lost Rs 1,200 crore on discounts and incentives. They are expected to lose another Rs.1,300 crore to dispose off the unsold inventory.
Mentioned a Tata Motors source that the ban would have a material impact on all the CV industry stakeholders. They are, he mentioned, assessing unsold inventory that lies with the company and the dealerships. According to the Tata Motors spokesperson, the decision to ban the sale of BSIII vehicles was unprecedented and unexpected. Erich Nesselhauf, Managing Director and Chief Executive Officer, Daimler India Commercial Vehicles (DICV), expressed that they planned a year in advance to meet the BSIV deadline. The company, he added, has sold its 1000th BSIV truck in the state of Kerala recently. Kerala migrated to BSIV emission norms in November 2016, much before the pan-India BSIV regulation came into force last month. Despite prior planning, DICV has come to have an unsold inventory of 200 BSIII CVs, said Nesselhauf on the sidelines of the launch of BSIV BharatBenz HDTs at Chennai. DICV had its CVs shed 400 kgs to accommodate BSIV apparatus. The company has adapted SCR technology to meet BSIV emission norms unlike Ashok Leyland, which has adapted intelligent EGR technology to meet BSIV emission norms. DICV is supplying AdBlue solution to its dealers (and to petrol pumps) to ensure quality and reliability. The price of BharatBenz BSIV CVs is the same as the price of the
The impact on CV dealerships was considerable. Dealers came under immense pressure to off-load BSIII CVs. If slow moving inventory made for a higher impact, dealers panicked at least in the beginning. Averred Piyush Jain of A V Motors, a SML Isuzu dealer, that the ruling is hard hitting, and has rendered dealers helpless. Jain compared the development with that of demonetisation. Demonetisation too hit us hard in the third quarter of FY2016-17, he said. “A strong (and clear) judgment should have been passed about discontinuing the manufacture of BSIII vehicles in 2016 itself,” opined Jain. “Had such a ruling been passed in 2016, it would have not resulted in the quantum of losses that we are staring at today,” he added.
Jain also touched upon the fear of electronics among CV buyers and operators. “The customer here is far from being accustomed with the high level of sophistication (electronic engine) BSIV emission regulation will call for,” said Piyush. He informed that he had an inventory of 20 BSIII vehicles. Apprehensive of the volumes in the first quarter of FY2017-18, Tej Ghatge of Chetan Motors, a Tata SCV dealer from Kolhapur said that he held an inventory of 55 vehicles as on March 31, 2017. Of these, he managed to fire-sale 20 vehicles. Huge discounts were offered. Discounts of Rs.50,000 on a Tata Ace was offered. Vimal Gujral of Cargo Motors, a Gandhidham-based Tata CV dealer, expressed that the development was shocking. He held an inventory of 500 vehicles as on March 31, 2017. If his regional centres would be accounted for, the count would go up to 700 vehicles. Not a happy prospect for certain, opined Gujral. With unsold inventory accounting mainly for Small Commercial Vehicles (SCVs) and pick-up trucks, Gujral revealed that they have hiked the discounts considerably.
Stating that the higher price differential between BSIII and BSIV emission compliant CVs is yet to result in a clear picture as far as the demand in CV industry goes, Gurjral said, “We are yet to witness demand for BSIV CVs.” Mentioned a prominent CV dealer, that they have been advised by their principal to register (BSIII) vehicles in their name. “There is a limit to the number of vehicles we can register in our name,” he said. Suresh Jain of Veerprabhu Marketing, a CV dealer from Jodhpur, expressed that inventory levels are usually higher at the end of the financial year. This is done to realise depreciation benefits by billing the inventory over the financial year end. With customers expecting unrealistic discounts, and at times below the cost of goods sold, it is not a happy prospect since the dealer has already been billed for local transportation, local taxation and sales tax among other charges, averred Jain. Jain’s dealership held an inventory of 200 vehicles as on March 31, 2017.
As a desperate measure CV dealers are known to give an extended credit of up to 30 days to some of their large fleet operator clients to off-load BSIII inventory. Said a dealer on the condition of anonymity, that the impact of Supreme Court’s order and the slow demand for BSIV CVs will reflect in the sales statistics for the first quarter of FY2017-18. The CV industry, he averred, will perform worst than when it was impacted by demonetisation.
With the Crisil report pegging the CV industry loss at Rs.2,500 crore, the total impact of the Supreme Court order is claimed to be 2.5 per cent of the annual revenues of listed CV manufacturers. According to the Crisil report, an expense of another Rs.1,300 crore will be incurred to dispose off unsold inventory of BSIII CVs. The effect of this development, claimed an industry source, will be spread across FY2017-18. The discounts offered during the fire-sale of BSIII vehicles is also expected to negatively impact EBITDA margins by 100 bps (one per cent) in FY2017-18. Expressed Rakesh Batra, Partner and automotive sector leader at Ernst and Young Services, that it is necessary to consider that the CV industry works globally on 20 to 30 days of inventory. This is within the distribution channel, and should have been accounted for as part of the plan to transition from BSIII to BSIV emission norms. An ICRA report pegged unsold inventory of BSIII CVs to between Rs.4600 and Rs.5800 crore approximately. Despite being caught off-guard by the SC ruling, SIAM’s latest report states the overall commercial vehicle segment to have registered a 4.16 per cent growth in FY2016-17. Medium and Heavy Commercial Vehicles (M&HCVs) grew by 0.04 per cent over the same period last year. Light Commercial Vehicles (LCVs) witnessed a 7.41 per cent growth while CV exports registered a 4.99 per cent growth.
Looking for clarity
The Society of Indian Automobile Manufacturers (SIAM) has written to Prime Minister Narendra Modi, seeking a meeting, claimed an industry source. The letter, he mentioned, speaks about the auto industry wanting to thrive in an environment where there is policy clarity and certainty. Especially, due to the long gestation period involved. Claimed a source on the condition of anonymity that the recent Supreme Court ruling contradicts the 2015 notification by the transport ministry. He mentioned that this has been mentioned by SIAM in the letter it wrote to the Prime Minister. The fact is, the die has been cast. BSIII CVs are history. The road ahead lies on the frame work of tightening regulations starting with BSIV. With the crash regulations said to come into force from next fiscal, the road ahead for the Indian CV industry is going to be as challenging as it has been for sometime now. With GST round the corner, the CV industry, it is looking like, is already anticipating big changes. In 2020, the bridge to BSVI emission norms will have to be crossed too.
Dr. A K Jindal,
Head – Engineering Research Centre, Commercial Vehicles, Tata Motors
Interview by: Ashish Bhatia
Q. How has technology evolved at the Engineering Research Centre (ERC) over the years?
A. We have come a long way. Both in terms of technological depth, and areas that we cover, right to the extent of product breadths that we cover. Till 2000, the number of products that ERC was working on were limited. The frequency of new product development was low. This has increased, in terms of output almost asymptotically. Especially in case of large commercial vehicles. The number of commercial vehicle products, like in the passenger vehicle space, have expanded. They have almost doubled. Within the same product space, the number of variants has increased. The days of having a one-fit solution are passe. So, from an ERC perspective, work, both in terms of depth as well as width, has expanded. In 2005, for example, we were roughly 2000 people. We now amount to 4000 people. We also have a lot of external linkages to ensure the capture and incorporation of new technology.
Q. You have laid stress on frugal engineering and local development. How has it worked?
A. Unlike before, we are today creating everything ground up at the plant. We are creating as well as co-creating. In many instances, it is in conjunction with the suppliers. The fact is, everything is being manufactured ground-up.
Q. How do you respond to changes quickly?
A. We maintain agility through different strategies that we have adopted. We are working on a platform approach. We are also working on the re-use of existing basket of components. Over the last four to five years, we have used the platform approach to the hilt. We have ensured that the same architecture helps us to come out with a large number of products. The ‘Ultra’ and ‘Prima’ platforms are examples of this approach. We now want to take it to the next level. We want to increase process agility through modularisation. Rather than to have a discrete set of components, we are now looking at creating modules. In this approach, the entire vehicle is split in 30 to 36 modules. The interfaces between these modules are standardised. As a result when one of the modules requires a change, one doesn’t end up changing the entire vehicle. This helps tremendously in reducing the development time; in reducing the re-engineering of products. This also helps in testing and validation among various other processes. We are converting our Bill of Materials (BoM) into modular forms. We are aiming at a day when the products we manufacture are defined by the customers.
Q. How would these strategies reflect through the 15 new launches and 200 variants you plan to launch?
A. Consider the Ace, SuperAce, Xenon, the entire Light Commercial Vehicle (LCV) range, Ultra, Signa and the Prima, and it will be these seven product families that will give rise to new launches and variants as part of our modular approach.
Q. Does that indicate a change in the tear-down processes at Tata Motors?
A. The format continues to be the same. We first tear-down, and then take the performance footprint. Then, we see how the aggregate engineers will join to take stock of the key learnings. What is changing is the set of requirements. For example, the weight of the vehicles. Earlier, the weight of the vehicle was not a priority, today it is. We therefore have to link everything in terms of its impact on fuel efficiency. Everything has to be measured in terms of the impact on the overall reliability of the system. The major change in the CV space, in the light- and medium-heavy vehicles especially, are the changing requirements of the customers. Customer expectations have undergone a huge transformation. The mindset from a point of view of maintaining it at regular intervals is changing. People are not really keen to maintain or carry out recurring interventions. This is having a big implication on design, and the way we design. The way we look at component design, component testing and their integration. The integration of aggregates. It may be at a micro-level, their severity does not diminish. They are of critical importance for the future.
Q. What challenges do you face to achieve sustainable mobility solutions?
A. I would like to divide it into two parts – emission and regulations. Stress on hybridisation, and fuel efficiency is high. These rank high on the priority list. We have a very clear objective of improving the fuel-efficiency year-on-year. It contributes directly to sustainability. There are other enablers like light-weighting among others. The BSIV emission compliant vehicles will feature high level of electronics. We have an opportunity to fine-tune fuel efficiency. We are looking at five-to-seven per cent higher fuel efficiency than was attained by BSII and BSIII emission compliant vehicles. The target is to outdo it with BSVI. It will all be achieved gradually, and with focus on light-weighting, driveline optimisation, duty-cycle dependent calibrations among others. Our objective is to increase fuel efficiency through all possible means. We are working on new technologies by keeping in mind vehicle aerodynamics, rolling-resistance, etc. Hybridisation can substantially boost fuel economy. Electrification also signals a move towards sustainability. Our aim is to have technology at an affordable cost. We may refer to an European bus in the case of Starbus Hybrid. In the case of electric bus (9 m and 12 m), that does not apply. If the market migrates to a sophisticated bus, we will provide it. If we simply provide a hybrid bus as an electric variant, the costs will escalate to an extent that there will be no buyers for it. Solutions therefore have to be tailored for the market. They have to meet the market’s perceived price points. Both our electric buses are testimony to our efforts to minimise the cost impact en-route to achieving sustainable mobility solutions. We will give a product that suits a particular application of the customer, and at their price point.
Q. What is the thought process behind cross-platform interchange?
A. Engines for instance, at a broad level, are agnostic in nature. How you really integrate them is where the skill lies. For example, Toyota uses its 2.4D engine in a huge number of platforms. Keeping the base the same, how you package is what the entire game plan is all about. It is not necessary that every time we work ground-up.
Q. How is a vehicle deemed fit for its appropriate haulage type?
A. Energy balance of a vehicle is a highly precise study. On an expressway, for example, a bus runs at a fixed speed almost. Braking frequency is less. The portion of braking energy as compared to the portion of overall energy consumed will be small. The driver will cruise at a constant speed, and at an optimum rpm. There is little scope for energy redistribution. When the engine is supplying power, the losses in top-gear include aerodynamic losses, rolling losses (tyres), and losses born out the extent of energy difference between the engine and the axles. Change the engine, and one gains. In the case of an intra-city bus, energy is used in acceleration and braking. Braking makes a substantial portion of the overall consumption. As per an old study, typical of an Indian driving cycle, the braking energy was 24 per cent of the overall drive-cycle, which is a waste. Also, energy is wasted when accelerating and decelerating. It is here that the potential for improvement lies; it is about how that energy could be recovered. Till a few years back there was no knowledge available on this. With a vehicle like the Starbus Hybrid, it is possible to regenerate the lost energy. Recovered energy is fed back to the battery. This energy is used for acceleration. Ultimately, the engine will run on a constant load. This philosophy is extended to all vehicle types where the vehicle drive-cycle is studied. The use of technology is highly cycle dependent. If it is Delhi where a stop is mapped at an interval of one-kilometer, a hybrid bus makes an ideal solution. A cost analysis is necessary if one were to decide if it would be a series hybrid or a parallel hybrid. A series hybrid turns out to be expensive whereas a parallel hybrid has its own set of advantages. The latter (parallel) will be effective when there are frequent starts and stops. Where a reasonable cruising speed is achieved between starts and stops. On roads with substantial straights, a parallel hybrid is most suitable. With less scope of cruising, a series hybrid would fit the bill. A series-parallel on the other does not fit the CV space. It is used in passenger vehicles. The world will eventually move towards electrification. Hybridisation is an interim solution.
Q. With Economies of Scale (EoS) lacking, what timelines could one look at for penetration of advanced technologies in CVs?
A. In the CV space, change in technology is taking place at a slow pace. The CV industry is cyclic, and the renewal rates are longer. Mindsets are conservative. The change in technology in the CV space is therefore slower than that in the passenger vehicle space. There, the renewal rates and technology upgrade rates are higher. Volumes too are far greater. One can very quickly ammortise technological development costs on a large base. In the CV space, the same is not possible.
Q. What are the challenges when it comes to ‘Fuel-cell’ technology?
A. There are challenges, and they are surmountable. In case of the ‘fuel cell’ bus, we had to use welded joints to reduce susceptibility of leakages. We had to use stainless steel – double steel joints, to avoid leakages.
Q. How much progress has been achieved in vehicle control strategy?
A. A lot has been accomplished, and a lot needs to be accomplished. If one wants to model the cell level in a battery to predict the performance for example, it is yet to be finalised. If one wants to predict the performance of a vehicle, it is do-able. It is a function of technology, its maturity, its database internal to the company, or external to the company. Maturity comes slowly, and one has to work towards improving the fidelity of these models. On how they can be made more predictive. Any simulation model today is as good as its validation.
Q. How does the Lithium Titanate Oxide (LTO) cell technology facilitate light-weighting?
A. The most prevalent and safe technology is Lithium iron phosphate (LiFePO4) followed by Lithium Nickel Manganese Cobalt Oxide (NMC), and LTO cell technology. These three have attained a high level of maturity. The shortcoming of LTO technology is the need for many more cells to be put in series to achieve the desired voltage. The good part is, the cycle life is high. In light-weighting context, because of the high lifecycle, one could do away with putting smaller battery packs and in-turn reduce weight. This leads to the concept of opportunity charging, or fast charging as we know it. A 400 kV charger can fully charge a 50 kV battery in about 10 minutes. If 5 kV has been utilised after running on one route and has to be replenished, charging will take a few seconds.
Q. Do you think LNG will cannibalise CNG as an established alternate fuel?
A. It is only the fueling method that changes. We foresee no cannibalisation therefore. Our thought process is that places where CNG was not available will be catered to by LNG. The strategy is to have multiple products for multiple places, and with multiple peculiarities. It is about what is available locally. In my opinion, both will co-exist. The only difference is in the way fuel is acquired and stored. There is no difference between a LNG or a CNG engine.
Q. What are the challenges when it comes to Intelligent Transport System (ITS) modules?
A. The current ITS is basic as far as my understanding is concerned. Bus stands are notified of the bus location, and it is about track and trace. It is good but not complete. The scope of ITS includes overall traffic management and improvement in traffic efficiency among others. Features such as these need to be integrated for the smooth functioning of traffic.
Q. Given the various fronts on which the ERC works, how do you gauge resource requirements?
A. We do not go on a resource shopping spree. What we do is prioritise. We do gap analysis to ascertain the area with a bottleneck, and how we can address it. We call for external help if the need be; from entities like Tata Technologies Limited (TTL) and others. We indulge in work-share with our suppliers too. This helps us to optimise our resource utilisation.
One can very quickly ammortise technological development costs on a large base. In the CV space, the same is not possible.