A large part of the CV industry is out of recession - The Financial Express

A large part of the CV industry is out of recession

VE Commercial Vehicles Ltd (VECV) is a 50-50 joint venture between the Volvo Group and Eicher Motors Ltd.

By: | Updated: March 20, 2016 8:19 PM

VE Commercial Vehicles Ltd (VECV) is a 50-50 joint venture between the Volvo Group and Eicher Motors Ltd. In operation since July 2008, the company includes the complete range of Eicher branded trucks and buses, VE Powertrain, Eicher’s components & engineering design services, and sales & distribution business of Volvo trucks within India. February 2016 was particularly a good month for the company, when it sold 5,032 units—4,936 units of Eicher brand and 96 units of Volvo brand—including exports, recording a growth of 57.3% year-on-year in an otherwise muted market. In the same month, during the Auto Expo 2016, the company launched a platform called Eicher Live.

Vinod Aggarwal, the CEO of VECV—who believes the government has delivered a growth-oriented Budget—says that abolishing the ‘permit raj’, re-looking at the Motor Vehicles Act and focus on infrastructure augurs well for the commercial vehicle (CV) industry, in an interview with FE’s Vikram Chaudhary. Excerpts:

How do you evaluate Union Budget FY17?

The government has delivered a growth-oriented Budget. We appreciate the effort to contain fiscal deficit. The focus on infrastructure—an allocation of R97,000 crore for roads, and proposal of 10,000 km of national highways in 2016-17 and that of 50,000 km state highways to be converted to national highways—augurs well for the CV industry. The reduction of excise duty on refrigerated containers will boost sales of reefer trucks and modernise commercial transportation. We also welcome excise duty exemption to ready-mix concrete manufactured at construction sites.

Abolishing the ‘permit raj’, re-looking at the Motor Vehicles Act, and opening up and supporting entrepreneurship in bus operations in new segments will help decongest cities.

Why are platforms such as Eicher Live important for the CV industry?

Among other things, Eicher Live ensures you drive profitability for your fleet. It helps operator track the location of the vehicle; he gets fuel-efficiency-related and fuel-consumption-related information each driver-wise, each vehicle-wise and each route-wise.

How does Eicher Live work?

There is a chip fitted to our electronic system and it is connected to a SIM card through a server. Through the server, all the information can be uploaded by the customer. This facility is currently available for all new trucks. For retrograde installation, we would first need an electronic engine. We cannot fit this system in a mechanical engine. In addition, there is onboard fuel coaching which is available online to drivers. It also helps analyse the number of times you are travelling in the sweet spot—the speed at which your vehicle is delivering maximum fuel-efficiency—during your entire trip. In fact, we have noticed that, between a good driver and a bad driver, the fuel-efficiency gap can be as much as 25-30%. Driving in the sweet spot can result in a minimum fuel savings of up to 10-15%.

Can Eicher Live help in uptime management?

Through telematics, you can automatically get information sitting in your office, if your vehicle needs attention or if it needs to be maintained. This information also goes to our workshop. Hence, Eicher Live helps you with fleet management, uptime management and fuel management.

Do fleet owners have to be trained before using it?

We have to ensure that, first of all, the driver is trained. With every fleet operator, there are relationship managers—we call them profitability champions—whose job is to show the customer that he is getting better fuel-efficiency. We explain the customer what sort of analytics report he can generate to manage the fleet in a better way.

Within the buses segment, which is your primary market?

We are one of the largest players in the school bus segment, where we enjoy a 30% market share. Another major segment is sleeper buses, and then light and medium duty buses, where we have a 20% market share. We also operate in tourist application buses, staff application buses and inter-city application bus markets.

Eicher manufactures bus bodies too. So when OEMs build bodies, does it take away jobs from the body builder market?

Not really. If earlier this job was done by a local unit, now it’s being done by OEMs. Yes there is a shift, but the job is still being done.

Bus body building is a labour-intensive job. When there is a shift from the unorganised sector to the organised, there will be less exploitation of labourers. That’s the right way to look at it. Safety-wise also it is important. When OEMs build, they comply with all the norms such as proper height inside the bus, leg space, emergency code, etc. All this means the design meets all regulatory requirements, and requirements of passenger, safety and comfort.

When you sell a bus, do you also sell maintenance?

We do. However, all operators don’t buy it. This is a modern method and has to be propagated more. If there is preventive maintenance, it will save customers from spending too much later on.

What is your take on emission standards for CV industry?

BS-III standards are still followed in some parts of the country. In others, it is BS-IV. But now we have to switch to BS-VI by 2020. This will result into a lot of capital investment, not only by OEMs but also by fuel companies. Hence, the cost for customers will go up.

Is it safe to say that the CV industry is out of recession?

Yes, a large part of the industry is out of recession. However, small duty vehicles are still under some pressure. For heavy duty industry, we are near the earlier peak we had achieved in 2013. For light and medium duty vehicles, we have achieved almost 68% of our earlier peak. Similarly, for buses, we have seen a significant rise and have achieved a new peak in this segment. But heavy duty buses are still waiting for recovery. The major driver this year will be infrastructure development; we are hoping for more growth in the construction trucks market.

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