Domestic CV business and exports form two strategic pillars for our business in India
Published on : Thursday 10-06-2021
Satyakam Arya, MD and CEO, Daimler India Commercial Vehicles.
One year after the Covid-19 pandemic, just as India was experiencing a respite, the second wave has hit with a vengeance. What is the impact of this on the CV industry in general, DICV in particular?
Like most industries, the Indian CV space has been adversely impacted by the pandemic. While we saw the beginnings of a strong recovery starting from the beginning of this year, the second wave has resulted in varying restrictions and lockdowns across the country. The impact of this can be seen in the lower availability of freight, labour shortage and parts supply. Despite this, there are some positive sentiments for the MHCV segment with movement of steel, cement, and capital goods. The financing situation has also improved with captive NFHC’s. Fleet utilisation in this segment remained the same with 80-90%.
DICV continues to observe the health and hygiene guidelines and social distancing protocols at our workplace. We are strongly encouraging employees aged 18 and above to be vaccinated and our Medical Centre has been holding ‘vaccine awareness’ sessions for employees, dealers and suppliers. We’re also continuing all our other safety measures such as sanitisation, social distancing and use of the DICV WELLth app (an app developed in-house to give employees access to telemedicine, health and hygiene guidelines, etc).
We have also devoted a considerable amount of resources to ensuring our stakeholders are supported; this includes our employees, suppliers, dealers, customers and the local community. One example of this is the vaccine centre we just opened at our Oragadam Plant to offer free vaccines to our employees and other needy members of the community such as truck drivers. We’ve also given free extensions on our warranty and annual maintenance contracts as a way of helping our customers. These and many other measures are ongoing at DICV.
Despite the slowdown induced by the pandemic, there were a lot of positive developments at DICV including fresh investments at Chennai and the launch of the new range in January 2021. Please elaborate on these.
Our new CV portfolio introduced in January 2021 offered a number of solutions to address challenges posed by Covid, thereby enabling customers to excel in their businesses and benefit society. For example, our BSafeExpress reefer truck is specially designed to transport vaccines. It comes equipped with state-of-the-art connectivity and uses newly developed refrigeration units that ensure the temperature and stability of the vaccines is accurately monitored and maintained at all stages of delivery.
With the new generation of BharatBenz CV’s, we are looking to move away from the traditional tonnage classification. Instead, we will focus on creating ‘the best truck for every need’, designing vehicles based on applications, and targeting specific sectors. The eight new products introduced this year will fill expand our product portfolio with this strategy in mind.
In terms of investment, we are committed to India and convinced of the long-term potential of this market. We have thus signed a second MoU with the Government of Tamil Nadu which covers INR 2,277 crore of investments aimed at expanding our business here. It demonstrates our unshakeable confidence in the long-term potential of India as a market for commercial vehicles and our ongoing commitment to the country as a whole.
What is the mix of business at DICV in terms of cargo, bus and mining? What about the export share of vehicles as well as components as a percentage of revenue?
The domestic CV business and exports form two strategic pillars for DICV’s business in India. While cargo and mining segments make up a considerable part of our business, Bus too is a focus area for us. In February we handed over 25 staff buses to a customer in the largest deal of its kind since the pandemic took effect.
Our top export destinations include Central Africa, MENA, and South East Asia. The majority of our exports are FUSO products. Last year we reached another significant milestone with over 35,000 commercial vehicles and 150 million parts exported. DICV is the only plant in Daimler Trucks which produces all brands under one roof – BharatBenz, Mercedes Benz, Freightliner and FUSO. DICV is now the global hub for medium duty transmission manufacturing in Daimler group. This demonstrates how successfully we have executed our strategy to realise the true potential of manufacturing in India. All in all, approximately 30% of our revenue comes from exports and the rest 70% from domestic business.
We will continue to make more products and parts here in India in close collaboration with almost 400 local supplier partners. We are proud to be a shining example of ‘Make for the World’, building India’s export footprint around the globe.
How are the various government initiatives as well as policy changes impacting the CV industry in India? Are there areas where things could be better?
We believe that the introduction of the vehicle scrappage policy will benefit the sector by helping create replacement demand in the market and providing much-needed support for greener, safer, and more efficient vehicles to make a positive impact in society. Aside from having a positive impact on demand and helping the environment, the scrappage policy proposes another benefit – Safety. Older vehicles with poor maintenance and lesser safety and comfort features are a hindrance to road safety.
However, it is important to note that for the scrappage policy to be seamlessly implemented, we should have a comprehensive plan in terms of removing ELV (End of Life Vehicles) from the road. OEMs and freight transporters need stronger financial support. Until old fleet vehicles are off the road, the benefits of implementation of BSVI vehicles will not be fully leveraged.
The Indian government is working on several other initiatives to revive the economy following the Covid-19 crisis, including the acceleration of several infrastructure projects, which is expected to aid in the recovery of the commercial vehicle industry. Overall, the scrappage policy and infrastructure spending is expected to trigger demand for the MHCV segment.
Globally several alternate fuel initiatives are being pursued by the CV industry, including hydrogen fuel cells and electric drive trains. How soon one can expect these vehicles on the road?
As a leading truck manufacturer, Daimler Trucks has always been committed to the best possible CO2 efficiency – in the service of environmental protection and the customers which attach great importance to low fuel consumption. Hydrogen and battery operation will pave the way for mobility of the future.
It is important to note that the transport transformation requires sophisticated vehicle technology with the quality, reliability and durability that commercial vehicle customers expect. In addition, it requires economic efficiency and the necessary infrastructure: Customers must be able to earn money with CO2-neutral vehicles and, of course, be able to charge them and use them in everyday transport without complications. Vehicle technology, economy and infrastructure – all three factors must be present in order for a market for CO2-neutral vehicles to emerge.
At a global level, Daimler Trucks plans the start of series production of heavy-duty fuel cell vehicles for demanding and heavy-duty long-distance haulage in the second half of this decade. The company also has the ambition to offer only new vehicles that are CO2-neutral in driving operation (‘from tank to wheel’) in Europe, North America and Japan by 2039. Once Daimler Trucks has electric trucks in series production and as soon as opportunities emerge for other markets, we want to lead the industry there as well. Based on our strong commitment and our activities so far, we will be in the best position to do so.
Please understand that we cannot yet talk about timelines for specific market introduction. We will inform you about that in due time.
How automated are the manufacturing facilities of DICV in India? What is the level of digitalisation at the plant as well as in the vehicles?
Being part of the global powerhouse of Daimler Truck, DICV has full access to a vast array of state-of-the-art technologies. We have a strong R&D team locally that tailors existing innovations to fit the Indian need of ‘more for less’ while maintaining quality standards. We have had a head start in Digitalisation and integration of smart connected features and our strategy involves – Product, Process, and People.
The first example is our complete customer service business which can be managed with a single app. We call this app ‘Proserv’, and it lets customers do more than 60 transactions on their smart phones. The second is that with BSVI, we have launched TruckConnect and BusConnect, which are state-of-the-art connectivity platforms. This will help our customers to improve the efficiency of their fleets on many fronts.
Currently, around 2 dozen digitalisation projects are being investigated at DICV. Some examples of digitalisation include internalising projects that were previously outsourced, such as website hosting and communication apps, and changing from paper-based to digital reporting/tracking systems such as for canteen management. A digitalisation swarm has even been formed to look for further opportunities internally. Our manufacturing line also uses automation; for example, our cabin-in-white uses robotics as we believe in technology making things easier for humans to work on the line.