Even as the recovery in demand remains elusive, the Indian commercial vehicle industry (CV) is evolving from duopolistic inertia into an intensely competitive one. Tata Motors has been the leader in the commercial vehicle (CV) market with over 50 per cent share and remains unchallenged. Ravindra Pisharody, Executive Director, Commercial Vehicles, Tata Motors, spoke to The Hindu on company’s strategies to fight emerging competition and CV industry issues, among others. Excerpts.
What is the kind of transformation we are seeing in your CV business through Horizonext strategy?
In the past, styling and design were more relevant for cars and not for CVs. But that is changing and truck customers have started preferring sophisticated products, and Tata Motors seeks to be in the forefront. So, under our Horizonext strategy, we have spun off three sub-fronts – DesigNext, PerformanceNext and FuelNext -- that will take us to next level with enhanced features and styling. Initially, our Prima range, which marks a notable change from traditional offerings that had wooden cabins, was built for heavy vehicles at the top-end, but we are gradually bringing it to mid-segment. Similarly, the Ultra range of trucks, which have been developed for 9-11 tonne category, will go into lower tonnage -- 4 & 7 tonne – category also. Under PerformanceNext, we are talking of levels beyond fuel economy. In FuelNext, we are showing our readiness to take alternative fuel with focus on better fuel economy and emission standards. We have a number of design ideas under Horizon 1, 2 & 3. H1 is about things that will hit market in the next two years, eg, ABS. H2 is little bit far away, and H3 is about things that may or may not come over 5-10 period. But we will stay invested. Over the past five decades, we have built a lot of capabilities in CV. I would say we are largely indigenous, but we definitely have collaborators from time to time.
Was Tata little late in sensing the competitive pressures and coming out with modern trucks? You had Daewoo for technical knowhow, and Tata could have led the modernisation drive in CV industry. Can you explain?
We are already entrenched in that. It is just that we talk very less unlike others. It is always common for a new comer to make some noise and say that we are going to teach India what new trucks are all about. But in many ways, our Prima range was ahead of its time. When we conceived Prima in 2004 or 2005, we realized that it would be required for two reasons. Firstly, those new platforms will surely come in India, and secondly to serve export markets. Prima is a combination of global design – it has British and American components, styling is Italian, inputs from Korea, and, finally it is an Indian product. Nobody has put in the kind of features and specifications that you see in Prima as compared to any our competitor. We have been ahead of the patch, and we continue to be ahead in many ways. So, modernisation we conceived almost a decade ago and products are coming out of that plan. Also, in a year we conduct at least 8-10 market surveys after a product is introduced. Based on that, we will have a pipeline of ideas or feedback from customers waiting to be included.
Will the highly fragmented fleet ownership trends and the practice of overloading pose significant challenge in selling modern trucks in India?
We are seeing the beginning of the tipping point. We are now entering price points and features that would make those modern trucks more affordable. But competition coming in this has some pluses as there is a bit of move towards slightly more aspirational segment, and, I think, we are well-positioned. By now, we have sold about 3000-4,000 Prima trucks, and customer are really satisfied with Prima range due to various benefits that include luxurious A/c cabins etc. With such feature-packed trucks, one can drive for almost 20 hours with breaks only for meals. Trucks that used to take 7 days for a trip earlier can reduce it to 3-4 days and that is critical for trucking industry. But, presently, the unloading still takes longer time at destinations as trucks have to wait in the queue. So such issues coupled with Octroi duties, the economics of an expensive truck gets somewhat hit. In India, enforcement has also been a big problem, but we hope things like overloading will get addressed seriously in the coming years. We are confident that the monthly numbers of modern truck range Prima will go up strongly in the next 6 months. In the next five years, our investments will be only in performance-related areas and not in cabins or factory capacity.
Will Tata Motors be able to maintain the 50 per cent plus market share in the face of emerging competition from both foreign and local players?
I think we have demonstrated it. It is wrong to say that competition is here for the first time. About 25 years ago, we were not the first entrant into important truck segment. Eicher, Mitsubishi, DCM Toyota, Swaraj Mazda and even Mahindra were there. In the last six years, MAN trucks were also available through Force Motors. AMW came. Others such as Daimler and Volvo have also come. This year our market share is two per cent higher than previous year in medium and heavy commercial vehicle (M&HCV) segment. I am confident that with the changes we are doing ... that include facelift for traditional cabins at a very nominal cost … we will have the ability to sustain such significant market share. So, I think we have all it takes to protect and even improve our market share against all types of competition. We know Daimler and Volvo are world’s top brands, but I think as far as India is concerned, we have latent skills in creating products for Indian operating cycle.
The rising trend of aggressive discounts in the CV segment has come under sharp criticism? What are your views?
Even during the best of periods, big fleet operators always got discounts. Nobody talked about it because it was manageable. Normally, when big fleet operator purchases 15 or 20 trucks, they will normally give orders for 100 trucks. But they will buy over phases. Sometimes, they will not complete full numbers. So, there is always some negotiation for discounts. But today the market is down. Since fleet customers are in no hurry to buy, and there is a huge gap between the start of their negotiations and finalisation of purchase order, sometimes a middle point is struck and it catches on. But discounts are on their way down. Since somebody is trying to gain share, and if they are not able to, one of the reasons they have to justify to their own management is also this. So, it is not right to blame one company for this practice. But I don’t think discounts will go away forever. However, this will definitely come down when the market improves.
When do you expect the M&HCV market to show some signs of recovery?
We really don’t know. From macro stand point, we don’t see any improvements in Q1 and Q2 of this calendar year. Clearly, we have to expect more of the same over the next six months. Our initial sense is that people who are thinking of buying trucks in the next 3-4 months may advance their purchases. But if there is no load and fleet is idle, those purchases won’t happen. Also, it is too early to talk about the impact of recent excise duty cut. We will get to know only after two months.