FCC

We are in line with the BS VI implementation timelines

2018-08-01

The HCV volumes of Mahindra has grown considerably in FY18, with an enormous growth in the market share. Vinod Sahay, CEO - Mahindra Truck and Bus Division, Mahindra Construction Equipment Division, Mahindra & Mahindra shares more on the company's plans in line with the market developments. What has been the performance of Mahindra in the heavy commercial vehicles (HCV) space in 2017-18? What are the major factors that influenced the performance? In FY18, our HCV volumes grew by 45 per cent as compared to 29 per cent industry growth, giving us a market share of 4.1 per cent. Mahindra Truck and Bus Division (MTBD) has achieved its highest-ever yearly volumes of 9,484 HCVs. This clearly shows increasing acceptance of our range with over 40 per cent of our sales being repeat purchase.  With the product superiority - consisting of over 10 years of CRDe expertise, FuelSmart Technology and Smart SCR - BLAZO staked a claim of being the best in BS IV compliant vehicles. Today, the brand confidently offers an all-round guaranteed experience through product, service and spares. These are key factors, which have led to this performance.  How do you look at the competition and what is the strategy adopted by the company to face it effectively? The market is witnessing substantial growth due to various infrastructure push initiatives of government. With buoyant sentiments, we are seeing influx of new products backed by services. We at MTBD have a clear mandate to meet both current and the latent needs of customers under 'Guaranteed Customer Experience' strategy. With this in view, we have been able to meet our customer needs in an effective manner. You have adopted a strong after-sales initiative for service, maintenance and availability of spare parts across the country. How successful is this initiative so far? Our after-sales measures have helped us winning customer trust, as result, over 40 per cent of sales comes from repeat buying. MTBD offers the following unprecedented service and spares guarantees to ensure that trucks are always moving: <ul> <li>Mileage guarantee 'Get More Mileage or Return the Truck' </li> <li>48 hours uptime guarantee (back on road in 48 hours or we pay </li> <li>Rs 1,000 per day)</li> <li>Two hours service reach guarantee on Delhi-Mumbai Service Corridor or we pay Rs 500 per hour</li> <li>36 hours service turnaround guarantee at dealership or we pay Rs 3,000 per day</li> <li>150 maintenance parts availability at MParts Plaza or they will be given free</li> <li>250 critical parts availability at select 50 dealerships or they will be given free</li> <li>We have given more assurance to the consumers with low cost of ownership through increased oil change intervals, reduced oil cost and a class leading six years/six lakh km transferable warranty.  </li></ul> How do you look at the government policies that affect MHCV market? What are the pros and cons of policies such as GST, emission norms, and scrapping of old vehicles? GST has given rise to new transport model boosting CV industry growth since due to realignment of distribution networks, stockyards or branches, hub-to-hub movement of goods and hub-to-spoke. In short kmpl, higher payload, high speed, comfortable cabin and breakdown-free trucks are getting valued. GST has smoothened the process, rationalised rates, removed border posts and as reported recently by CRISIL, trucks are already plying 25 km more per day. Though we are expecting the same to increase or to cross 100 km per day in the coming years. Hence, GST significantly impacted and driven demand for CVs in e-commerce sector, resulting in efficient trucking and in fact leading to higher demand for SMART and MODERN trucks. There is a huge growth in tractors-trailer and multi-axle haulage segments, while tippers are catching up. The recently introduced e-way bills have facilitated cross-border transportation. Clean and safe mobility is one of the key focus areas of the government, which is committed to drawing up a long-term roadmap that will harmonise our emission standards (beyond BS VI) with the global benchmarks by 2028. In India, the scrapping and dismantling industry poses a serious environmental threat. The vehicle end-of-life policy is aimed at encouraging people to scrap their old vehicles and replace them with modern, more fuel-efficient and less polluting ones. The solution could lie in creating a sustainable business model for old vehicles and removal of these vehicles should be done in a phased manner. If we pull out the old commercial vehicles immediately, then there would be major disruptions. Freight rates can increase because of vehicle pull outs, and resale value of 5-10-year old vehicles can increase. And if we follow the transferable credit rule, then the functionality of operating economics is possible. Old commercial vehicle scrapping policies would need enormous efforts, framework and resources. Above all, we first need a policy that can kick-start the process. How are you prepared with the government plan of shifting from BS IV to BS VI emission norms by April 2020? We are in-line with the April 2020 BS VI implementation timelines. Our efforts are towards maintaining the BS IV FE leadership of our BLAZO HCV range in the BS VI era as well with least possible cost increment over current levels in engine. What are the opportunities you foresee in the truck market? The HCV truck market in India is moving away from basic economy trucks to value trucks. With growing volumes, regulatory changes, customers are looking beyond a low-cost product for more productivity and efficiency at a price premium. The focus on higher productivity, efficiency, and lower total ownership costs will gradually push value truck growth rates ahead of the economy trucks segment. Additionally, growing inclination towards hub-and-spoke model is the driving factor for this segment, while e-commerce sector has been preferring 25T long wheel base vehicles with modern technology, better fuel efficiency and reliability. In the past few months, we have noticed a shift towards 31T long wheel base vehicles by this segment. E-commerce still accounts for a small part of the domestic freight industry. But the potential is significant. With the government recently approving 100 per cent FDI in single brand retail and the number of online shoppers projected to increase to 175 million by turn of the decade, we expect significant demand of smart transport solutions in e-commerce sector or segment, going forward.