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“Foresee More Opportunities In LNG & CNG CVs Than Electric CVs”
The technology levels in commercial transportation are still very low even though there is a lot of discontinuities that are happening such as the BS-VI emission norms.
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VE Commercial Vehicles (VECV), a joint venture of Volvo Group and Eicher Motors (EML), has a wide array of product lines ranging from 4.9 tonne to 55 tonne. Interacting recently with BW Businessworld, Vinod Aggarwal, MD and CEO, VECV revealed that the company’s priorities are more towards CNG- and LNG-driven vehicles than pureplay electric vehicles. Excerpts:
As (Passenger Vehicles) PV sales have been on an uphill drive over the last few months, do you foresee positive trends in the CV sector in the medium term?
Absolutely! This is in line with our expectations that the CV industry is improving month after month. If you compare the FY 2019-20 GDP figures on a Y-O-Y basis, Quarter 1 was 24 per cent down, Quarter 2 is also expected to be little bit down, Q3 will still be a little bit down, but we are expecting the fourth quarter to grow. So based on these estimates, economy (annual GDP figures) may be down by about 8-10 per cent. With that scenario, you will always see the better results for the CV sector, which is closely linked to the economy. As the economy is doing better now, I am very optimistic on the CV sector as we move forward.
There is a shift in focus for India’s trucking industry from just making trucks to now emphasising on driver comfort and safety and also efficiency. Your thoughts on this.
Our vision has always been on driving modernisation in the entire commercial transportation in India and in the developing world. The technology levels in commercial transportation are still very low even though there is a lot of discontinuities that are happening such as the BS-VI emission norms. However, at the same time, a lot of new trucks are still produced without cabins. On our part, we have already announced that whatever trucks or buses that we sell will be 100 per cent connected. This means our customers always remain connected with our uptime centre.
There have been a series of reformative measures by the government which is likely to boost the CV sector in the long run? Do you agree?
Absolutely! This is because the government acts as a catalyst by making those positive statements. So, it means efforts are being made to manufacture more here even though it may take time. Similarly, when you say we are going to offer stimulus, it means the government is working on creating demand. When they make such statements, the mindset becomes positive, and when that happens, people start thinking about business. If people start thinking positively about business, then the activity itself goes up.
Do you also think India’s logistics sector needs to be strengthened further?
Yes, it is a very unproductive sector. In any developed economy, the logistics costs are 5-7 per cent of the economy. In India, it is still around 12-13 per cent of the GDP. This suggests there are a lot of improvements that have to happen in the logistics sector. Trucks and commercial vehicles are a major part of the logistics sector. Other than that, if you improve the road infrastructure, you can cut down the waste and accidents and also improve productivity on the movement of goods and services.
Please tell us about your predictions for this financial year.
In the three and a half tonne and above (segments), the industry size was around 550,000 in 2018-19, which later dropped by 40 per cent to 340,000 units in 2019-20. Then, of course, the first six months in this (fiscal) year was down by 75 per cent at around 50,000 units. If you look at October-November numbers, the expectation is that we should be almost equal to the sales of the second half of the last year. Accordingly, the total volumes should be around 200,000 units per annum (5T & above). Next year, it should be somewhere between (numbers registered during) FY18-19 and FY19-20 at maybe 400,000 units or around that figure. As far as VECV is concerned, we will do relatively better than the industry growth.
Of late, e-powered Small Commercial Vehicles (SCVs) are gaining traction thanks to the unprecedented boom in the ecommerce sector. So does this segment interest you?
We are already servicing some e-commerce companies as we have products which are highly productive for them. However, we don’t have any plans for electric SCVs as our hands are full now. Though, there is a huge opportunity in the alternate fuels such as CNG trucks or LNG trucks. So, commercial vehicle industry will first move to alternate fuels rather than towards electric vehicles.
Even though electric vehicles have become a buzzword, the opportunity though lies in CNG and LNG (powertrains). Although we are already supplying few buses, our focus is more on the alternate fuels as we are commanding almost a 50 per cent market share in the CNG segment in the 4.9 tonne to 16 tonne segment.
Lastly, what is your forecast for the CV industry for 2021?
The CV industry is on the path of recovery, and we have to push it hard. We have to remain very positive and it’s out of woods. So, we are very, very optimistic about it. Also, there are a lot of opportunities in the market, and we have to take the full advantage of that.