Interview: Vinod Sahay, CEO, Mahindra Truck and Bus
Q. What changes have been effected to get the Blazo to the ‘X’-level? A.
There are two-three major technical changes that have been effected. The turbocharger has changed. It is now a waste-gate unit for a more precise turbo management. It also aids the availability of air to ensure better combustion and efficiency. The intercooler has been changed to improve cooling efficiency. We have also moved to low friction oil at the engine level, transmission level, and the rear axle level. The increase in fuel efficiency by five to seven-per cent (it is even higher in some of the variants) is a net impact of these changes. The fuel system has also been further optimised.
Q. What led to these changes? A.
It is no secret that every CV manufacturer is working on fuelefficiency. It is the most important parameter in the operating economy of the fleet. Our recent calculation has shown that fuel accounts for over 55 per cent of the operating costs post the diesel price hike. Earlier it accounted for 50 per cent. We gained a good lead in fuel efficiency in BSIII. It was then that we benchmarked against the industry offerings. In BSIV, we took time to benchmark against the competition to claim that the Blazo was the most fuel-efficient truck. Improvements carried out by the competition to their products brought us feedback that the gap was narrowing. We also took into account the feedback from our clients that a part of the fuel efficiency is pocketed by their driver. The demand emerged that Mahindra Truck and Bus get the Blazo to offer even higher efficiency. This would enable them to get five to sevenper cent efficiency even if the driver pocketed an amount of it. The Blazo X was primarily conceived to address this requirement. We have a fuel efficiency cell in our organisation. One of the few things we want to benchmark is fuel efficiency. The change from Blazo to Blazo X is a bit costly. We, however, vouched for it since this is something that we stand for. To improve fuel efficiency and NVH, we moved to an electroviscous cooling fan. The Blazo X is at least five per cent better after reduced margins. Consider the 31-tonne Blazo, and our lead over the competition has been maximum. It is now at the level of 36.5-tonnes post the new axle norms. The difference is double-digit in this segment as far as the Blazo X is concerned in relation to the nearest competition. The need is for the transport industry to realise this. They seem to be bogged down with discounts and net pricing.
Q. How high is the influence of discounts and net pricing on the market? A.
Buyers continue to be bogged down by discounts and net pricing. Someday, transporters will have to get out of that mode and start valuing trucks for what their value is.
Q. How did you account for regulations while developing the Blazo X? A.
The axle norms turned out to be beneficial for us. On many parameters were already meeting the specifications. For example, the power to weight ratio of the Blazo range. While a big part of the industry operated at 180 hp for a 40-tonne truck before the new axle norms were announced, the scenario post the implementation of axle norms means the same truck is now of 46-tonnes. Consider the possibility of it being overloaded, and the figure could effectively go up to between 47- and 49-tonnes. The truck could be certified, but would mean stretching it much beyond it is capable of being stretched. With the Blazo and Blazo X, a big advantage we are offering is the fuel-smart technology. We have optimised it to a level where irrespective of the truck producing 230 hp or 274 hp, the power to weight ratio continues to be beneficial. We did not have to struggle with the power to weight ratio ever or to meet the torque level required to carry the additional load. Another example is the brakes. We were the only player in the industry operating at 10 bar. It is now that many players are moving to 10 bar brake pressure from 8 bar pressure as part of the certification for higher load carrying capacity. When the regulations came in, the Blazo was well prepared to meet them. What we had to do was an amount of additional reinforcement in some areas of the chassis since we had cut down on weight during the transition from Mahindra Navistar to Mahindra Truck and Bus. To reduce weight we turned to use high strength steel as it would ensure higher strength at
the same time. Barring the additional reinforcement in some areas of the chassis we did not require to do any changes to the engine or transmission. The cab that we offer meets the next level of safety norms, which has not even come to India. With some changes, the cab can meet the norms that are prevalent in Europe. The funny situation in this country is that cars have norms for the cabin but not trucks. An OE cabin is not even mandatory. The mandate is to put a blower. Rather than a blower, I would vouch for basic safety norms first. BSVI is a big challenge. We are on it. We are confident of meeting the timeline. The good bit is that we don’t need to change the engine. The basic engine will remain the same. This will ensure a high level of parts continuity.
Q. How do you look at safety being less regarded in CVs? A.
It does not look like the new safety norms will eliminate cowl. The issue is, the safety norms applied to buses are being applied to OE vehicles. The Bus Code essentially is applied to OE. A chassis can still be procured and a body built on it outside. There is a need to fully implement the Bus Code in the interest of the safety of the people who travel in them, of the safety of the driver and other staff. The fine print of the Bus Code and the Truck Code gives an impression of it applying to OE players. If the OE player makes a cabin, it has to meet the norms. The same norms may not be applicable if a cabin on a cowl chassis is made outside. It is the same case with buses. Chances are that the application of AIS155 norms that are coming in force from April will be limited to OE players. This may help to protect the interest of small-scale industries that build bodies outside, the same should not come at the cost of safety. It is essential that such smaller industries are upgraded. The life of the people travelling in a truck or a bus is no less precious than those travelling in a BMW or a Mercedes-Benz car. There is a need to at least make the basic European truck cabin as the norm standard. If India can follow Europe for emission norms, why not follow it for safety norms too. To produce Euro6 trucks and sell them as cowl chassis may not reflect well. The cabin should at least be made mandatory with the basic European norms for the same. Let the small-scale industries cater to the bodybuilding requirements. In a Rupees-four lakh cabin and body construction on a cowl chassis, the cabin costs just about Rs.80000 to Rs.90000. Catering to body requirements could still amount to significant value addition for smallscale industries.
Q. Hasn’t the truck and trailer code implemented? A.
The Truck Code is launched but is for OE cabins. Bus Code is launched but is effective only in OE offerings. The AIS155 is also aimed at OEs. The Trailer Code has been implemented by a few states. There is a need for sensitivity towards safety as much as it is about emissions.
Q. Feeling more refined, what work towards elevating comfort has gone into the Blazo X? A.
We have done a lot of work towards comfort and refinement. This includes the seat, steering (that is tiltable), ergonomics overall, and the size of the cabin. We have worked on the cabin NVH even though the cabin is not of the fully suspended variety. It is three-point suspended. We did extensive trials with our drivers. We also benchmarked against the competition, and in field conditions. The drivers found that they could drive for an hour or two longer than they would in competition trucks with cabs made out of cowl chassis or trucks with older cab designs. From an operator’s point of view, it amounts to more kilometers covered in a given time frame. We know of a client who bought 60 Blazos, and is into very high kilometer clocking bracket for parcel deliveries. The trucks work with two drivers, and either driver after his sleep is fresh enough to drive for a long distance. We are looking at more and more clients to utilise their trucks more; take advantage of the benefit they offer. Trucks are becoming like aircraft. The more they are flown, the more they will deliver. The tendency to buy as per the initial acquisition cost has to change. To encourage such change we are providing transporters a taste of world-class products.
Q. How are you looking at the transport scenario panning out amid growing challenges? A.
The scenario is not good because of the rising input costs. The benefit of additional axle loading is not retained by fleet operators. It has started to go to the consignors. With additional axle loading, insurance costs have gone up. Maintenance costs have gone up in proportion to the rise in tear and wear. A big part of the revenue has gone to the consignors since it is a demand and supply situation. There are more trucks on the road than the demand would dictate. The rise in diesel prices is double the rise in freight rates. Interest rates have been inching up. The festive season did not bring as much business as was expected. The current situation is very stressful for transporters. We are expecting fleet operators to look at fuel efficient, reliable and dependable trucks rather than to crib about factors like fuel prices,
freight rates, etc., that are out of their control. We are encouraging fleet operators to change their old habits. To stay relevant it is necessary that they change some of their old habits. They have to rise over the habit of buying the cheapest truck available. Consider the fact that we are investing in technology, and it is not to show off. It is to ensure superior usability. There is a need for them to buy a Rs.25 lakh or Rs.30 lakh asset not because it is cheap, but because it has superior usability to ensure higher productivity and profitability. Until that does not happen, they would have little room but to complain about high fuel prices, stagnant freight rates and policies. Rather than complain about things out of their control, they could look at things that are in their control, and choose wisely. The disruption in the industry has already begun with players like Rivigo and Delhivery. To stay relevant they have to change.
Q. Will 2019 be an exciting or challenging year? A.
It will be a challenging year. It is going to be the year of elections. It will be tough to know where the demand heads post elections. Another challenge would the prebuying trend. Since a BSIV truck cannot be sold even if it has been produced earlier, no CV maker will be ready to take a risk of building stock with an impression that it will sell before the BSVI timeline. Like it happened during the migration to BSIV, no manufacturer would like to enter into a distress sale. Since the size of the opportunity will be difficult to gauge, the only window available would be between August 2019 and December 2019. In January 2020 to March 2020 quarter, manufacturers are expected to produce CVs to order. Challenges with be manifold. Vendors are also likely to stop producing some of the components that are moving to BSVI in August or September 2019 itself. As an OEM, we would have to stop producing not so unique models by November 2019. Even the lead models will have to stop in January 2020.
Q. Would you rationalise your product change going to BSVI? A.
The good thing is that we are not facing any packaging issues. If all the variants will be available in BSVI from day-one is the question. About 80 to 90 per cent of the volumes will have to be protected foremost. We are looking at the move to BSVI as an opportunity to clear any complexity of product portfolio. We will not drop our major platforms or major variants, what we may do is to develop and not sell some of the low selling variants till the time we see demand. Being a small volume player, this is an on-going exercise for us.
Q. With regulations mounting, is ROI becoming an issue? A.
To meet each regulation considerable investment is called for. To recover the investment, a certain volume level is necessary. That certain level of volume is possible only when there is enough time span available. Between BSIV and BSVI, the time available would be three years. A clear answer to whether the investment made by the CV industry towards migration to BSIV has been amortised is no. ROI is becoming a challenge. The Government has been appraised of it. Post BSVI there is another norm coming in 2022-23. We are hoping that our investment towards BSVI is going to have a higher shelf life than BSIV.
Q. What will the alternative fuel vehicle quest be like in a post BSVI scenario?
A. It will be there. Electric propulsion is being talked about for city vehicles. No BSVI vehicle can reach the level a zero-emission electric vehicle does. There may be a debate on the source of electricity, the fact is, an electric vehicle shifts the source of pollution away from its typical area of functioning. For electric propulsion of medium and light CVs, work will be needed on weight management. The weight of batteries would mean a payload capacity trade-off. The other factor would be the ability to set up an infrastructure. Consider building a charging infrastructure across the country. It will be a big challenge. For long-haul trucks and inter-city vehicles that ply hub-to-hub, the prospect of electric propulsion sounds far-fetched at least at the moment. Electric evolution will happen more around light CVs, and in areas like shared mobility.
Q. Are CV sales starting to slide? A.
A heavy decline in heavy CVs has happened. Over September 2018 TIV, the November TIV has resulted in a 45 per cent decline. It is almost half. The amplitude of growth and decline of heavy CVs is directly proportional to their GVW. There are multiple factors. The stress is going to be there for some time. A downturn may happen in the first year of BSVI. Till then, the CV market should do well. There are many macroeconomic parameters which are not as good as they were two or three months ago. Many players downplayed the impact of axle loading. This one regulation has led to a 25 per cent increase in loading capacity overnight. In one day, it led to one full year of sale in the industry. The impact of this is gradually starting to show. Other than a few segments like e-commerce, car carriers and scooter carriers, which were operating at full load,
most other segments have been granted an ability to carry more. Thus, a 25 per cent increase means 100 trucks are now doing the job of 125 trucks. With diesel price rise not backed by an equivalent rise in freight rates, rise in interest rates, muted festive season sales, and the muted growth of SME sector, which is known to provide return load, we are expecting a decent uptake in the fourth quarter this (financial) year. I am also quite hopeful of the period between July 2019 and December 2019 post-election. Next year may not signal a down cycle, the growth, however, may not be as high as expected earlier. The expectation was for 20 to 25 per cent growth this fiscal. A growth achievement of 15 per cent for heavy trucks should be a good figure. Likewise, 17 per cent for lighter trucks should be a good figure. Mahindra Truck and Bus is growing faster than that. In lighter CVs, we have grown by 28 per cent against an industry average of 15 per cent. In heavy CVs, we have grown by 50 per cent in the first eight months. The industry average is 35 per cent. We have been the fastest growing brand in heavy trucks. Looking beyond, and the market outlook is not as positive as it was a couple of months back with the deterioration of macroeconomic parameters.
Q. How are you looking at the Furio performing in such an environment? A.
There is no wrong time or right time. The proposition of Furio is very strong. In the long-term, ICV segment is one of the two or three CV segments that have a positive outlook. The other two are the small CVs and the heaviest CVs. The heaviest CV market has been disrupted by the axle loading norms. There is some confusion about which would be the lead model. If it will be the 37-tonne, 42-tonne or the 49-tonne CVs. The initial seeding of close to 70 Furios has evoked a good response. If is offering better fuel efficiency than many thought would be possible keeping in mind the industry standards. Cabin comfort is ensuring that the drivers drive more. The truck is also proving to be reliable. With six players already present, we expect the ICV segment to be a competitive as well as a crowded place. To create a place for us, we are offering a proposition that is 15 to 20 per cent better in overall economics. Once the operators start getting a taste of it, we will be able to create a place for ourselves in the segment. Unlike the heavier segments, the best player in the ICV segment has 35 to 37 per cent market share. Given the competitiveness of the segment, it amounts to an opportunity as well as a risk for us. In terms of an opportunity, the ICV segment is far more open than HCVs where two players are controlling 85 per cent of the market share. ICV segment is one such segment where buyers are experimenting with brands. Operators in this segment are far more receptive to change. We have some large fleets that claim to be aware of the latest technologies around the world and are welltravelled. Yet when it comes to buying a truck in India they will buy only on price. At the other end, there’s this ICV customer who is far less glamorous, but is ready to fetch a mechanic on his bike to ensure that the truck (laden with fruits) gets back on road quickly.
Q. Has the new axle norms upset the 41-tonnes rigid segment, which was touted as the next big change? A.
With the new axle norms, the 37-tonnes 14-tyre five-axle truck has become 42-tonnes. A five-axle or six-axle truck with additional payload and a GVW of 41.5- or 43-tonnes was displayed in two forms. One was a six-axle truck with 43-tonnes GVW. The other was of a 41.2-tonnes GVW with a twin-tyre lift. As per the new notification, the government has given two options for registration. In case of trucks with a tridem axle, the GVW allowed is only 42-tonnes. Adding two more tyres hikes the load capacity by a mere 500 kgs. Considering the earlier 37-tonne rigid truck becoming a 41.2-tonnes truck, the addition of two more tyres to gain a mere 500 kgs (in GVW) is simply not worth it at 42-tonnes. The new axle loading norms that have been implemented are based on the European norms. The norms thus state that with a tridem axle the load increase can be only so much. There were efforts made to register trucks with a tridem axle at 47.5-tonnes. As per the government rule, this can be done only if the distance between the centre of the first tridem axle and the centre of the last tridem axle is more than three-metres. This norm is there to protect the road from damage as a higher intensity of load gets concentrated in a smaller area. The annexure of the new axle loading norms clearly mentions that such a truck with tridem axle cannot be registered at 47.5-tonnes. The way out is to re-engineer the vehicle and increase the distance between the first axle centre and the last axle centre of the last three axles. The six-axle truck, at the other end, can potentially go up to 49-tonnes. Including us, there are industry players who are working in this direction. It will take time. The other question worth pondering upon is, whether there is a loading availability at that level. Also, with the length of the vehicle going up to 32 or 35 m, it may not be easy to maneouvre.
Q. Wouldn’t a 49-tonne rigid truck affect the 40- and 49-tonne
tractor-trailer market? A.
The construction truck market that was earlier preferring 40-tonne and later moved to 49-tonne would move to this kind of vehicle. Certain applications will shift. As for the hub and spoke model of transportation is becoming more and more pronounced every passing year. It has just got more pronounced by the new axle loading norms. The hub to hub portion that was starting to prefer tractor-trailers is seeing a change as the axle loading norms have given a fresh lease of life to rigid trucks. While rigid trucks can now look at going to 49-tonnes, tractor-trailers can now look at going to 55-tonnes. Rigid trucks will have a higher proportion of hub to hub movement than what was earlier conceived. There is a need to increase the loading and unloading efficiency. A big investment is needed in that area to ensure mechanisation. With trucks becoming costly, the need is for them to keep flying like an aircraft and spend little time on the tarmac. In India, a full trailer configuration of up to 22.5 m is allowed. The semi-trailer is 18.5 m. The full trailer configuration at 22.5 m length could attract applications like car carriers. With overall GVW restricted, the possibility to a road train looks slim as of now.
Q. What advantages and risks lie in the guarantees you offer as part of the value proposition? A.
The risk is not very high since it is not a marketing campaign for us. Many thought that the fuel efficiency guarantee was a marketing campaign when it was announced. It was not. Being a listed company, there’s hardly any scope with the auditors dictating a need to underwrite the risk. It is about the need to provide enough for future liability. To be able to provide the mileage guarantee, we had to carry out a test with the supervision of a third party (CIRT in this case) with all the competition models at every GVW point, and with various loading criteria. We had Ernst & Young certify the whole process. Only once the auditors were convinced were we able to offer the mileage guarantee. We are delivering upon it. Some 20,000 Blazos are on the road, and not a single truck has come back. For spares guarantee, we first strengthened our internal mechanism before announcing it. We spent six to seven months in building processes, IT capability and more to be able to offer the spares guarantee. We have an automatic ordering system. Our spares guarantee has worked at 99.9 per cent. The 36-hour workshop campaign has a delivery rate of 90 to 95 per cent. We have hardly any liabilities coming out of the schemes that we have floated. We are mindful of the fact that with every new regulation pertaining to emissions set the clock back to zero. Beyond the Blazo X, we are putting things in our trucks to ensure that we are able to evaluate all the technologies available in India to increase the fuel efficiency delta further. There would be a theoretical drop in fuel efficiency moving from BSIII to BSIV. We are doing a lot of things, and are confident that we will be able to retain the advantage. We are encouraging the buyer to look beyond. We are trying to challenge him in an area where he is looking at buying a Rs.25 lakh or Rs.30 lakh truck based on price. There is a need for him to realise that it is not the right way to purchase a truck. There is a need to look at what lies beyond the price. If the truck offers a good power to weight ratio. If there is better cabin comfort for the driver to drive longer. If the efficiency of the operation can be increased by factors that are within the control of the operator. Even as the argument about drivers pocketing a certain portion of the fuel efficiency continues to float, there are a number of smart young generation transporters who are getting every penny out of the fuel efficiency benefit trucks like ours offer. There is a need to pay the driver well. To take care of his other interests and incentivise him. There are fleet operators who are doing it. It is only that more and more operators have to come to practice it. With the young generation of transporters challenging the practices of established transporters, it is in the interest of the industry that they change and look beyond. They can’t just say that 52 per cent of the costs (fuel costs) are out of their control. If ways and means of controlling those 52 per cent of the costs are available, they need to be looked at. Seeking to offset it by looking at a lower acquisition cost of an asset may not work for long.
Q. When could we get to see heavier buses rolling out of Mahindra Truck and Bus? A.
We are not looking at the category that includes Volvo and Mercedes-Benz buses. We are investing to engineer an LPO. We are looking at segments other than STU and high-end inter-city luxury buses. We will remain in front-engine AC and non-AC segments. We will also provide regular LP buses; regular width and wider buses. We will provide buses that go up to a seating capacity of 55 people in standard form. A lot of our buses will come in BSVI configuration. We are refreshing our bus portfolio. We will be operating at 30 to 35 per cent of the total industry volume. We could take to 50 or 55 per cent, and not beyond in our current stage of evolution.
to benchmark against competition in field working conditions. Says Sahay, “We found that the drivers could drive for an hour or two longer than they would in competition trucks with cabs made out of cowl chassis or trucks with older cab designs. Citing an example of a client who has a fleet of 60 Blazos, which clock very high kilometers every month with a two-driver arrangement in the parcel segment, Sahay avers, “Either driver is fresh enough to drive after a sleep of eight hours.” Behind the driver and co-passenger seat is a bunk that would support a twodriver arrangement for long-haul duties.
Making good progress, the truck feels easy to pilot. Of the opinion that fleet operators should look beyond the initial acquisition cost, and at the ability to control factors that they can control rather than to crib about factors like rising fuel prices and toll costs, which are out of their control, Sahay mentions, “The changes (we carried to Blazo X) were a bit costly, but we decided to go ahead with them as it would add to the truck’s value proposition.” Accorded with an aim to improve fuel efficiency and NVH, the engineering the Blazo X has been subjected to, the result has led to it offering superior usability, higher productivity, and profitability, according to Sahay. An empty stretch of road ahead is an invitation to push the pedal and increase speed. The truck responds positively. If it hints at a farourable power to weight ratio, the development of Blazo X over the Blazo saw Mahindra Truck and Bus engineers taking into consideration the ability to clock higher speeds on the basis of rising infrastructure. Clearly marked on the tacho is an economy range. This would help the driver to extract the most efficiency.
Producing 950 Nm of peak torque at 11001700 rpm, the engine has the truck is good stead. It is a vital part of the company’s strategy to ensure that the Blazo offers superior driveability. Revealing that the power to weight ratio proved to be beneficial, Sahay mentions, “We did not struggle with the power to weight ratio, or the need to meet the torque level required to carry an additional load when the new axle norms came in.” Manoeuvring well on a narrow stretch of road that includes a sharp turn, the Blazo
X 31 feels quite modern. A three-point turn further down the road is tackled without the need to reverse. The drive back to the bay is
smooth and devoid of any trouble. In a scenario where the input costs are rising and the benefit of additional axle loading is not retained by fleet operators, the Blazo X 31 reflects a big change over the Blazo. Coming in an environment where the benefit of additional axle loading is going to the consignors rather than the fleet operators, the truck promises a superior operating proposition. As fleet operators deal with rising insurance costs, toll and maintenance costs, which have gone up in proportion to the rise in tear and wear, post the axle loading norms, the Blazo X has entered the market at a time when there are more trucks on the road than the demand would dictate. With diesel price rise not backed by an equivalent rise in freight rates, rise in interest rates, muted festive season sales, and the muted growth of the SME sector, which is known to provide return load, the Blazo X, as a challenger brand offering, makes a strong case for fleet operators to benefit from. With an ability to enable them to manage costs that are in their control rather than to crib about those that are out of their control to ensure better productivity and profitability, the truck may not address the need for lowest initial acquisition cost. What it would do instead is to ensure higher cost savings in terms of TCO with the use of modern technology effectively, and superior usability.