With the Pithampur (Indore) plant running at full capacity, VE Commercial Vehicles is looking at a new plant, claim industry sources. They draw attention to the shift of Eicher heavy-truck production out of the Bangalore facility of Volvo Trucks. The Eicher heavy trucks claimed to be based on Volvo Asia truck platform, are said to be adding to the already overflowing Pithampur plant. Claimed to average 7000 units per month, any rise in demand may call for the creation of a new manufacturing facility, mention sources. They draw attention to the company clocking sales of 6000 units in December 2017, and express that VECV, with an offering in almost every segment of the CV market in India barring the SCV segment will sooner or later have to invest in a new plant. They claim that the company is looking at investing Rs.400 to Rs.500 crore in FY2018-19, a chunk of which is earmarked for BSVI technology development, and the development of an electric vehicle range. If VECV would develop the parcel of land it is said to have at Bhopal is not yet clear. the Bangalore facility of Volvo Trucks, at the other end, will soon start rolling out Volvo cars.
VE Commercial Vehicles has introduced new trucks.
Story & Photos by: Anirudh Raheja
The Indian e-commerce segment is turning out to be a hot investment opportunity. Online retail business in India is estimated to grow over 1,200 per cent to USD 200 billion (Rs.13,30,550 crore) by 2026, up from USD 15 billion in 2016, according to a recent report by financial services firm Morgan Stanley. As per the study, online retail will account for 12 per cent of India’s overall retail market by 2026. Currently, it is estimated to be close to a mere three per cent. With e-commerce and express logistics being the primary growth drivers, the voluminous segment industry in India is claimed to be growing at an exponential rate of 50 per cent every year. Anticipating such an explosive growth perhaps, Volvo Eicher Commercial Vehicles (VECV), to have a significant presence in the segment, has introduced new trucks. These were unveiled at the ‘Eicher Pro Biz expo’ the company organised. Aimed at different stakeholders of the e-commerce and logistics industry, the new trucks are specially engineered for the e-commerce segment. Out of the 14 trucks Eicher displayed, the new trucks, priced between Rs.16.26 lakh and Rs.27.4 lakh, these included five new variants Eicher Pro 1000 and Eicher Pro 3000 series variants. To address the sectoral demands across long haul, short haul and last mile delivery, the trucks, to be precise, are Eicher Pro 1110, Pro 1110XP, Pro 3012, Pro 3014, and Pro 3015.
Expected to help VECV, which registered a cumulative growth of 50 per cent in December 2017, and recorded a total sale of 5955 units in December 2017 against 3969 units in the December 2016, to achieve greater heights, the five new trucks are light and medium-duty in nature. Expressed Vishal Mathur, Vice President, Sales (LMD trucks), VECV, that transporters are keen to replenish their fleet backed by a good monsoon boosting rural demand. “It bodes well for organised players that are entering the e-commerce space. The segment could play a major role in shaping the overall commercial vehicle industry,” mentioned Mathur.
The growth of e-commerce in India has the potential to outpace its growth in many other countries, the five new trucks that VECV has introduced have been developed to address the dynamic needs of end consumers. With faster delivery and reduced turn around times a pre-requisite, the company has fitted the Pro 1110 and Pro 1110XP with a 24 feet cargo body. Powerful, and having the longest service interval of 50,000 km, the trucks, according to Mathur offer fully built container solutions. Operators can start using the vehicle from day one rather than wait for the body to be built. Fitted with the E494 (135 hp, common-rail, 3.8-litre diesel)series engine that comes equipped with Volvo EMS 3.0, the Pro 3000 series truck will be made available with a sleeper cab and advanced technology options like Intelligent Driver Information System (IDIS), fuel coach, cruise control, domex chassis and parabolic suspensions. Speaking of CNG vehicles in the five to 10.7-tonne GVW range, Shyam Maller, Executive Vice President, LMD Trucks, explained that they are specially designed to cater to the needs of customers in Delhi NCR. “These vehicles have been designed especially for customers on the lookout for a wider load body. For instance, the carriage of electronics and apparel,” he stated. Citing Haryana and Delhi as the key emerging markets for organised logistics, Maller also drew attention upon the Total Industry Volumes (TIV) witnessing a 40 per cent surge in the respective regions.
Change for the better
While traditional logistics involved the movement of goods from manufacturing hubs to consumption centres through a linear routing mechanism, E-commerce logistics is a combination of ‘one to one’, ‘many to one’, and ‘one to many’ routing based on the availability of goods and the destination. It hints at the prospect of logistics needs of e-commerce firms continuing to evolve rapidly. Besides e-commerce companies required to scale up to meet service levels, it will also require an increased focus on tier2 and tier3 cities. Trends like reverse logistics are expected to result in a higher demand for efficient vehicles from organised players. On the flip side, teething issues remain to be dealt with for the e-commerce segment to grow as envisaged to begin with. The mandatory compliance with E-way bill for inter-state movement, for instance, will come in to effect from February 01, 2018. It is expected to benefit the organised part of the
long-distance logistics industry. With the government looking to enforce a regulatory discipline through a slew of changes besides the E-way bill, OEMs and transporters too have no choice but to fall in line and comply to realise the true potential of the E-commerce segment. “Regulations need to be met. Even though the industry did face hiccups during the initial days of BSIV implementation and GST rollout, things are yet to streamline with the industry expected to eventually find change beneficial,” he concluded.
Vishal Mathur, Vice President Sales, Light and Medium Duty Trucks, Eicher trucks and buses.
Q. How has the LMD segment fared for Eicher trucks and buses?
A. The LCV industry was not picking up due to various factors like the change of emission norms, and the rollout of GST. As things are settling down, more and more transporters are coming in to buy new vehicles. The rural demand was further boosted by a good monsoon across major parts of the country. Good rural demand was followed by a good festive demand. All these factors collectively boosted demand, and the industry has come out of the slump it witnessed six months back. It is doing well, and December 2017 was one of the best months for the industry. It was one of the best months for Eicher too. In some pockets, we exceeded the industry average. In Haryana for example, it is a base for a large number of auto ancillaries. In Delhi, the demand for CNG trucks is on the rise. It is largely because of a greater awareness to facilitate cleaner air. With new CNG pumps opening up, the demand for CNG trucks is expected to rise.
Q. How are you looking at e-commerce?
A. With the entry of established players in the e-commerce segment, buying has been very strong. It is a fast-rising segment today. India is expected to outperform many countries as far as the of e-commerce industry is concerned. With more and more companies establishing their footprint in the country, various transporters have shared their experiences about the end customer turning dynamic. Customers want faster deliveries and faster turn around time. With the help of our new range, we are increasing our thrust in the market. With our 24 feet cargo body, we are giving more space. We are also giving them fully built container solutions so that the transporters can start using the vehicle from day one rather than to wait for the body to be built. The trucks that we offer are equipped with modern technologies like fuel coach and cruise control. Such inclusions directly correlate to the e-commerce business.
Q. How do you look at regulations, GST and stricter implementation of CMVR?
A. It’s improving the environment. With GST, a lot of things are easing out, and transporters are finding it beneficial to move the goods directly from one place to another, helping the parties involved. Organised players are looking forward to the e-way bill. There is a higher degree of awareness of new regulations. They can leverage the benefits of higher fuel efficiency and a larger cargo body. It would ultimately lead to a lower total cost of ownership. As transporters figure out the taxation part, I believe most of them are happy with reforms taking place. They are benefiting from the changes.
VE Commercial Vehicles (VECV) will be investing Rs.400 crore to Rs.450 crore towards capacity expansion, claim industry sources. They cite that this is part of the company’s plan to invest a similar amount year-on-year towards development of new products; BSVI compliant products. Seeing a good rise in the 14- and 15-tonne segment due to buyers downgrading from 16-tonnes, the company is looking at good demand to emerge from various businesses as they re-arrange their strategies and assets to align with the GST. In the 14- and 15-tonne, VECV is claimed to enjoy a good demand for its Pro 1000 series and Pro 3000 series trucks from ecommerce companies among others. Sources draw attention to the company having a slew of products in the 5- to 16-tonne GVW. These product offerings are also expected to help the company find a strong foothold in the rising last mile connectivity market. VECV recorded 12.5 per cent growth in FY2016-17 by selling over 58,000 units as against the sale of 52,000 units in FY2015-16. The industry grew at four-per cent. Experiencing improvement in all the segments, and exports in particular, VECV, through capacity expansion, will continue to have products across every price point and application areas. It will be able to address every customer need too, with a wide range of engines on offer.
Q & A
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.
The tipper segment drove heavy commercial vehicle sale last fiscal. The Total Industry Volume (TIV) grew by 27 per cent.
Meeting BSIV emission norms with EGR and SCR technology, VE Commercial Vehicles has launched the Pro 5000 Series.
Eicher Trucks & Buses, a part of VE Commercial Vehicles Limited, has employed Exhaust Gas Recirculation (EGR) and Selective Catalytic Reduction (SCR) to meet the BSIV emission norms. The SCR technology has found its way into the heavier Pro 6000 Series and Pro 8000 Series trucks. The Pro 5000 Series trucks that the company recently launched in Mumbai employs EGR technology in combination with Volvo’s EMS 3.0 electronic governing architecture. Filling the gap, and turning VE Commercial Vehicles into a full range player according to Vinod Aggarwal, Managing Director & CEO, the Pro 5000 Series trucks range from 16-tonne to 49-tonnes. Found in 4×2 tipper and rigid haulage guise; 8×4 haulage guise, and in 4×2 tractor guise among others, the Pro 5000 Series, is powered by a common-rail 5.7-litre six-cylinder (E694) engine that produces between 170 hp and 192 hp depending on the application type.
Sporting the Pegasus business grille and twin round head lamp design, which marks a departure from the single unit clear-lens assembly design found on other Pro Series trucks, the Pro 5000 Series is claimed to offer unmatched reliability and optimised operational cost. Expressed Aggarwal, “With the introduction of Pro 5000 Series, we have come to offer the widest range of heavy-duty trucks. The Pro 5000 is available at different price points, and is equipped with intelligent features like fuel coaching and cruise control.” Stressing upon competitive acquisition cost of the Pro 5000 Series trucks, Aggarwal mentioned that they recorded good growth last fiscal. It were more than the industry average.
In FY2016-17, VE Commercial Vehicles performed well. Despite being a challenging year, the company recorded a 12.6 per cent growth against the industry growth of four per cent. Tight planning on inventory, said Aggarwal, helped minimise the impact of the Apex Court’s order to stop the sale of BSIII vehicles from April 01, 2017. VE Commercial Vehicles produced only 2500 units after demonetisation. It was left with 1000 BSIII units in the plant and some 400 to 500 units with the dealers when the court order was issued. A decision to export or convert the BSIII vehicles has been taken, averred Aggarwal. Posting 50 per cent growth in HCVs, 33 per cent growth in MCVs, and 17.5 per cent growth in buses, the company exported 8,500 vehicles last fiscal, an increase of 25 per cent. Informing that the company has introduced a 180 hp bus powered by the E694 engine also found on Pro 5000 Series trucks, Aggarwal opined, “The market feedback we have received is that our bus gives higher fuel efficiency.” It has been sometime now that VE Commercial Vehicles has been increasing its STU exposure. It has supplied buses to KSRTC, BMTC, MSRTC, and Gujarat and Telangana transport undertakings according to Aggarwal. If the captive bus body building plant at Pithampur is proving to be advantageous, access to Volvo technology is also proving to be of much help. The VE Commercial Vehicles joint venture between Eicher and Volvo will turn nine on July 2017, and the EMS 3.0 governing system found on the Pro 5000 Series trucks is a reflection of Volvo technology percolating into VE Commercial Vehicles.
Powering the heavier Pro 6000 and Pro 8000 Series Eicher trucks are 5-litre and 8-litre engines that are produced by VE PowerTrain (VEPT), a joint venture company between Eicher and Volvo with a plant at Pithampur. The plant replicates the production systems that are in place at the Skovde engine plant of Volvo in Sweden. The engines produced at VEPT plant are also supplied to Volvo locations the world over, and in a form that makes them Euro6 compliant. The engines made at VEPT also find their way into Volvo’s other group entities like Volvo Penta.
Volvo tech for superior performance
If the EMS 3.0 governing system in the Pro 5000 Series trucks is reflective of Volvo technology percolating into VE Commercial Vehicles, the technology is also helping the CV maker deliver products that promise best in class efficiency. Expressed Aggarwal, “Technologies like EMS 3.0 present the company with a big advantage.” Quipped Gill, that they were the first to introduce cruise control in 2014. When VE Commercial Vehicles was established nine years ago, the Eicher product range that was transferred from Eicher Ltd. to the joint venture company were essentially CVs that employed Mitsubishi technology. With the participation of Volvo, these legacy products were upgraded and turned around to offer a superior experience, reliability, efficiency and low cost of operation. The E694 engine interestingly employs a bit of legacy technology, a bit of UD technology and a bit of Volvo technology claimed sources close to the company. If that provides an interesting insight into the ways of working at VE Commercial Vehicles, it is easier to understand the claim made by Gill that technology and emission norms are not new to them. “We looked at trucks running more, and earning more. As technology leaders, we have installed Eurodip paint tech and robotic welding line for the manufacture of cabins at Pithampur,” mentioned Gill, The Pro 5000 Series of trucks are available with a fully built cabin (long-haul trucks like the Pro 5031 come with a sleeper cabin), and a rolling chassis (cowl). Telematics is optional, and also the M-Booster technology, which is claimed to further enhance fuel efficiency according to Gill.
Increasing efficiency and performance
VE Commercial Vehicles overhauled the parts distribution network to up efficiency and performance even as it continues to launch new products with the view of addressing the exacting needs of the market. Said Gill, “Over 97 per cent of the parts are shipped the same day. Over 98 per cent of our trucks have delivered on the fuel efficiency promise.” “Our vehicles offer 97 per cent uptime,” he stressed upon. Offering features like fuel coaching and cruise control, which are claimed to reduce driver fatigue and inform the driver and the operator about fuel efficiency, the Pro 5000 Series, it is clear, is a step forward by VE Commercial Vehicles to increase medium and heavy commercial vehicle market penetration. With GST expected to roll out in July, and if delayed, by September 2017, the year ahead looks challenging for the CV industry. VE Commercial Vehicles continues to be confident of growing faster than the industry. To achieve greater market reach, the company, said Gill, has invested in 250 GPS connected breakdown repair vans, and a dial-a-part call centre. The company has 151 3S dealers, 13 2S facilities, and 23 SPD and 160 EGP facilities as part of its network to support its clients.
With BSIV CVs expected to call for better dealer support, what with OBD systems on board, VE Commercial Vehicles is looking at addressing the exacting needs of the CV market. In the wake of rapid changes the market is experiencing, customer expectations are changing. As a full range player, for VE Commercial Vehicles, AMCs and re-built engines, and gearboxes, will matter as the need for up-time rises. The Pro 5000 Series trucks reflect not just upon VE Commercial Vehicles’ capabilities, and its journey into the future, they also reflect upon how the Indian CV industry is changing.
Volvo Eicher Commercial Vehicles (VECV) has divested its entire stake in its US-based subsidiary. Eicher Engineering Solutions, to Spain’s SegulaTecnologias Espana for a sum of USD 1.85 million. The company has sold 100 per cent shares in its subsidiary to the Spanish company. According to Vinod Aggarwal, MD & CEO, VECV, the divestment is part of VECV’s plans to drive modernisation in commercial transportation, both in India and globally. The company’s immediate business outlook, he said, continues to be positive. “We remain firmly on track with all our strategic plans and initiatives,” mentioned Aggarwal.
Anticipating a strong uptake in domestic sales, Volvo Eicher Commercial Vehicles (VECV), is said to be gearing up to launch three new Pro series models. These, claim industry sources, will be variants of existing Pro models. The company, expecting to grow faster than the industry average, claim industry sources, is also said to be working on an expansion plan. With the Pithampur plant running at full capacity, the company is claimed to be looking at developing its land parcel at Bhopal to ensure operational efficiencies. With heavy and medium CV market showing signs of moderation, the Volvo Group joint venture company is expected to increase concentration on LCVs, whose market continues to grow. VECV has been increasing its thrust on buses too, claim industry sources. It has bagged orders from STUs, and will be introducing new bus models, they add. While work is on to expand the Pithampur plant capacity from 5,500 units per month to 7,000 units per month, the company, claim sources, has dedicated a sum of Rs. 400 crore for the activity. A portion of this sum will also be used for product development, they add.