Challenges and opportunities
Q. How do you plan to keep the excitement going at Mahindra Trucks and Buses?
A. The team at Mahindra Trucks and Buses Limited (MTBL) has done a good job. The expectations from the Blazo have been met. By and large, wherever the Blazo sold in BSIII version, the promises made by the company have been fulfilled. In this industry, at the end of the day, it is the product, technology and the core offerings that make a difference. Beyond a point, if the core is not delivering, there may not be much to do. A CV is not a lifestyle product. It has to be a profitable business for its buyer. With Blazo BSIV, we strongly believe that the delta, which we used to have earlier, has risen further. The migration to BSIV has brought about a generation change in CVs. It may not be the first time that a new emission norm has come into existence, BSIV emission norms have set a new paradigm nevertheless. The engine remained mechanical through BSI, BSII and BSIII migration. With BSIV migration, there’s not a single mechanical engine in use. It will be a world of electronics hereafter. With the move to BSIV, it is not just the electronic engine, but also the exhaust after treatment. There is an amount of after treatment required in EGR and SCR. It increases the back pressure. Back pressure will only increase further with the move to BSVI emission norms. A six-litre engine of an earlier era will no longer produce the same amount of power and torque. Efficiency, power delivery and torque will change. Coinciding with the implementation of GST almost, the migration to BSIV has signaled that a truck is going to be a far more efficient asset than it was earlier.
If it used to travel 90,000 to one-lakh kilometers per year, it will now travel one and a half lakh kilometers. We have come to think that what was probably our weakness is now our strength. If our 7.2-litre engine makes us future-ready, we are quite excited. We are at a very good position right now, and will be taking the same engine to BSVI. Others may have to seek a new engine to meet BSVI emission norms. We are in a position to go forward in a much stronger way. After extensive trials we have come to conclude that our mileage guarantee stands, and in a bigger way than it did in the case of BSIII.
Q. What was the reason behind selecting SCR technology?
A. We decided to move ahead with SCR technology because it does not have any negative impact on the engine. EGR is good for a range of products where the power to weight ratio is high. In LCVs, where the power to weight ratio is upwards of 10, EGR is a good technology. In heavier CVs, where 49-tonne is pulled by a 230 hp engine, the power to weight ratio is just about four. Add the possibility of overloading, and EGR as a technology is just not sufficient. Upon adopting SCR technology, we have made an effort to be future-ready. We have chosen airless SCR, which is a necessity to meet BSVI emission norms. Airless SCR is costlier for the manufacturer, but is cheaper for an operator. Airless SCR consumes less AdBlue. Our truck will thus consume 10 to 15 per cent less AdBlue. Only one filter needs to be changed after every 60,000 kms, and it costs Rs.1200. The four year SCR cost for our truck will be Rs.7300. Frequency of filter change in air-assisted SCR is high. The costs involved are in the region of Rs.60,000 to Rs.70,000 over a span of four years. Our advantage in Blazo BSIV is even bigger than it was in the BSIII guise. We are stressing upon communicating the advantage a Blazo offers, and it is going to be a slow and steady process. Unlike industry leaders, we do not have the ability to put thousands of trucks in one go. For a challenger brand like us, we expect people to conduct a careful evaluation.
Q. What are your plans to fill up the gap between the LCVs and M&HCVs?
A. We have refreshed the cabin of our LCVs during the last two-to-three months. We have also extended ‘Fuel Smart’ technology to our LCV range. It has two modes unlike the three modes the system in the Blazo has. The light goods vehicle range gets ‘mileage guarantee’, which will be extended to light passenger vehicles. To address the gap between six and 25-tonne, we are working on a new platform that will spring up ICVs and MCVs. We plan to launch the next set of vehicles, especially in the nine to 16-tonne range in the next twelve months. The node of highest volumes in ICVs keeps shifting. Five years ago, it was in the 10.5-tonne range, today it is in the region of 13.5to 14.1-tonne. We see volumes in three segments going forward. These would be tractor-trailers and heavy rigid trucks; trucks in the 13- to 16-tonne bracket, and 3.5- to 4-tonne segment. We will soon complete the missing link.
Q. What plans do you have to tap the growing bus segments?
A. We have been investing in buses, and have a range from 15-seater to 40-seater. In this financial year, Mahindra will launch the LPO range with 30-, 40- and 45-seat configuration. ICV platforms’ ability to come up with passenger vehicles will be explored in the second phase. We have introduced air suspension in our LCV range. The LPO range will complement the existing range of lighter passenger vehicles made at Zaheerabad.
Q. How would MTBL travel along the line of change in technology?
A. The challenge to move up to BSVI in two and half years has been taken. Alternate fuels, especially electricity, will call for supporting ecosystem. Our electric CVs will carry a lot of knowledge acquired by Mahindra Electric, a group entity. We will work jointly with them. We are working on bus projects. Heavy electric CVs call for huge investment. With electric propulsion concentrating around lighter, urban vehicles, we, as a group, do not see much challenge. We may not be ready to sell a vehicle in the market, technology-wise we will not be found wanting. Talking about cabin technology, the one that we offer is crash test certified. Termed the best, and the most modern, the cabin is also well equipped. It measures 2.4 m compared to the cabins others offer, which measure 2.2 m. AC is optional, and new e-commerce companies are opting for it. Acceptance among organised players is rising since an AC cabin improves asset utilisation. DigiSense is a connected vehicles initiative that provides the ability to talk to the driver, operator and the operator’s customer. A wealth of information is obtained. A customer operating oil tankers for Bharat Petroleum for instance can monitor his or her truck beyond the interest of the oil company to monitor its arrival and departure at its terminal. An electronically governed engine enables the ‘box’ to communicate with the engine ECU. CAN-data can be transferred, and used for remote diagnosis and prognosis. Data could be used to provide better service, and to carry out preventive maintenance. Adding huge value for us, and enhancing our ability to design a better truck, the dashboard of our truck could display CAN-data as well. Driving information could be divulged apart from fuel efficiency. When the driver stops, he can use the ‘box’ to find out a better route. Apart from geo-fencing, as and when the regulation demands, driver productivity management or driver utilisation could be incorporated. If a regulation to drive eight hours is implemented, the ‘box’ can be programmed to talk to the driver. This will call for the ‘box’ to be Wi-Fi and Bluetooth enabled. Information regarding trailer coupling and tyre pressure could be had as well. The possibilities are endless, and up to the imagination of OEM. The driver and operator should migrate to such a platform.
Q. How close are we to truly connected CVs?
A. We are not far from truly connected CVs. It is the cost that has to be justified. Regulatory push makes it easier, but the challenge lies with the operator getting the price from the consumer. What goes into a CV, someone has to pay for it. A consignor’s ability to pay for a safer truck has to be there. Considering the need for a mature ecosystem, our operating economics in BSIV is not inferior to BSIII.
Q. What growth opportunities do you see?
A. For a challenger brand like us, everything is an opportunity. We command a five per cent market share. In heavy commercial vehicles we are the number four player. We are seeing good traction in some of the segments like the 37-tonne segment, and the 49-tonne segment. In these segments our position is better than the industry average of five per cent. There are pockets where we have reached a market share of 15 to 20 per cent. The shift to BSIV has increased our competitiveness. We see a big opportunity in truck body code. Over 65 per cent of what we sell are fully-built vehicles. The sale of BSVI CVs is expected to begin from December 2019 itself. This gives rise to two issues – ROI and the ability to operate BSIV CVs. With BSVI at the doorstep, migration to larger engines will be faster. Engine back pressure will rise. We will stick to our current engine and airless SCR with some additional bits thrown in
to meet BSVI emission norms. In LCVs, we will have a mix of EGR and SCR. The power to weight ratio will help to decide.
Q. As competition gets fierce, and ways of working change, what group synergies would you look at?
A. Synergies for us come out of various things. They are about technology mostly. Digisense is a result of synergy. Common-rail diesel engine is another example. There’s much synergy at the supplier end. Without synergies we would not have been as cost competitive. With the entire auto business indulging in common sourcing, the chances of dealing with the same vendors increase. Synergies at the back-end and front-end provide an advantage. Front-end synergies involve dealers. About 25 per cent of the dealers are common to our farm or auto businesses. The facilities are independent but the owner is the same. He gets the advantage of a common back-end, and we get the advantage of familiarity. In service, we are exploring synergies where smaller, lighter and heavier commercial vehicles share the same service center. It saves overheads for the dealer, and we are able to have a better reach. We have synergies with our finance arm, Mahindra Finance, which has a share of 30-35 per cent. We seek synergy with Mahindra Research Valley for development of technology.
Q. Would a new engine be developed for ICVs?
A. Some of the current engines will be upgraded. We will also make new engines out of our portfolio of engines.
Q. How do you plan to keep the suppliers and dealers motivated?
A. We believe that what applies to our employees, also applies to our partners. Satisfaction necessarily does not come from money, it comes from the level of engagement. We have scored high in the J D Power survey despite having come out of red just yet. We have scored much ahead of the Tatas and Leylands of the world. The biggest reason for this is the way we treat our channel partners; treat their problems as ours. If you speak to our channel partners, they will talk about the confidence we have given them. We make an honest attempt to solve their problems. Our partners have been with us through the worst times. Most will today indicate that the light is visible at the end of the tunnel. Most of them are raring to go. I wouldn’t say that it is a job done. The process is constant. Players like us can’t take things for granted. We can’t rest on the assumption that our dealers are making good money. Most of them are not. Most of them have just about turned profitable, or have broken even. They have some way to go to recover their past investment. We operate with a thumb rule of full honesty. We tell our partners that let us solve your problems together. We don’t commit that we can solve them 100 per cent as part of it is within our control and part is not. Some things are out of our control because of the way things are happening in the industry right now., which leaves very little retention to most of our dealers’ kitty. We are expanding our dealer network on a need basis largely. Due to our innovative approach to overcome service challenges, we have achieved good results. The service guarantee, for example, we offer on the Mumbai-Delhi corridor. No other player has been able to give such a guarantee. We are stressing on technology and low cost innovation to solve some of our problems. We do not ask dealers to invest beyond what is required. We tell them to keep room for scaling-up the operation when the need arises. In some areas, single digit expansion could happen to fill up the network gaps in this and the next fiscal. We are looking to expand the service guarantee to other Golden Quadrilateral corridors. For the other corridors, and the east-west corridor, our commitment of 48 hours remains. We have 11 parts plazas. At the end of this year, we are looking at crossing 80.
Q.What are your export plans?
A. Under the Auto and Farm sector at Mahindra, we have identified two major geographies – South Africa and South Asia. We have a group-level team looking after these. We support them. In the two geographies, distributors have been appointed. Our focus right now is on the domestic market.
Q. What is your forecast for the CV market?
A. In terms of the quarters, it is very challenging given the current situation. A report mentions that India will be the fastest growing economy till 2025. If the economy grows, commercial vehicles will also grow. There are intermediate challenges. GST is a two-way sword when it comes to commercial vehicles. It will increase the efficiency of existing fleet. It will also add to over capacity in some sectors. It will therefore take three to four months before the order is set. Operators will also evaluate. If the truck were to run 7,000 km a month, it would now run 10,000 km. The operator will evaluate fleet utilisation. He will evaluate how many new trucks are required. Most are re-calculating as the earlier thumb rules are no longer effective. There could be a momentary challenge over twoto-three months. The unfortunate bit is, it gets coupled with the lean season. There is a likelihood of short term stress. In the medium and long-term there is no need to worry. The BSVI migration will haunt the industry next.