The acquisition cost of a commercial vehicle is a high-ticket purchase, and contrary to other segments, a large fleet operator ends up paying less price per vehicle, than an individual or small fleet owner, revealed Manish Raj Singhania, President, Federation of Automobile Dealers Association (FADA).
He was speaking as a panelist on the topic of ‘Replacement Demand and CV Sales’ at the Financial Express Commercial Vehicle Conclave 2023. The other panelists in the session included:
- Ashish Bhagra, COO, Mahindra CERO
- Kunal Aggarwal, Co-Founder, Kool-Ex
- Bal Malkit Singh, Past President & Chairman Core Committee, AIMTC (All India Motor Transport Congress)
- Prasanna Patwardhan, President, BOCI (Bus and Car Operators Confederation of India)
- Manish Raj Singhania, President, Federation of Automobile Dealers Association (FADA)
The august gathering was discussing the ground realities, challenges and thoughts of the commercial vehicle industry’s key stakeholders.
Singh stated that with electrification happening, India’s dependency on China will increase because the largest share of lithium mines and battery production is with China. He pointed out that trucking is the second largest industry in India after agriculture.
Patwardhan pointed out that while the government is pushing the adoption of electric buses, the fact of the matter is that there is still huge demand and waiting period for them, and hence private players will find it quite difficult to acquire them even if they wanted to.
“Staying in the trucking space is not really profitable for all” stated Aggarwal. He found it was better to switch to an alternate business and hence got into the cold-chain business. Agarwal shared that 1.97 billion doses of the 2 billion Covid vaccine doses were moved by Kool-Ex.
Singhania stated that dealers are the facilitators between OEMs and the customers. With all the change coming in the CV space there will be new initiatives that will come up in the dealer spaces. This means there will be a need for skill enhancement and technological changes too.
Representing India’s first organised vehicle recycling company, Mahindra CERO, a JV between Mahindra Accelo and MSTC (government of India) Bhagra stated that one needs to assign an end of life to a truck or a bus, keeping in mind the safety of the drivers and passengers and also the profitability of the vehicle. “You have a birth certificate for a vehicle in the form of registration, now you have a death certificate for the vehicle which is the scrap certificate,” he said.
He mentioned that there are 80 million vehicles reaching end-of-life in the next two years, which presents an opportunity to recycle 80 percent of steel content in the vehicle.
Commenting on the scrappage policy, Patwardhan stated the suggestions of the major stakeholders in the trucking community have not been taken into consideration when designing the policy.
“You won’t shoot a 70 year old man in the head, because he has reached ‘end-of-life’, similarly why scrap perfectly usable vehicles?” He argued that the scrappage of a vehicle should be determined on the actual usage of the vehicle, the number of kilometres it has run, the condition of the vehicle, and not just blindly put a expiry tag to the vehicles.
Malkit Singh supporting the thought asked for the retrofitment of new engines and reconditioning should be allowed, so that there is no economic loss for old vehicles.
Patwardhan further stated that as per the current norms, nearly 10 lakh vehicles in the past few years would need to be scrapped, but “the reality is that we don’t have the infrastructure. Out of 19 lakh buses, 6 lakh buses are working for schools, where annual mileage is not more than 15,000km. So it’s not even out of warranty when it reaches scrapping age. Whereas intercity buses reach more than 15 lakh kilometre in just 7-8 years. We need to find a system that looks at number of kilometres and hours of running.
“Dog lives for 10 years, elephant lives for 100 years, but you are saying shoot both at 10 years of age,” added Patwardhan.
Sharing the woes of the trucking community, Singh pointed out that despite so much technology and policies being introduced, there still was harassment of truckers on highways. He suggested that officers should be given devices to check papers digitally, but still there are old systems and bribery of nearly Rs 48,000 crore annually he says quoting a Save Life Foundation study.