Tata Motors chose Chennai as the venue for the national launch of commercial vehicle Intra. Girish Wagh , president, Commercial Vehicles Business Unit, Tata Motors, elaborates on the choice of venue, and dwells on the state of the industry, in an interview. Excerpts:
When you have a successful mini truck in the Ace, what’s the logic for launching a similar new product?
Ace will continue to play in the mini truck segment and with time, will keep getting upgradations, be it in performance or attributes. The maxi truck segment is a growing category and so we wish to have presence here through the Intra.
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It offers better driveability, higher speed and acceleration. Intra comes with higher power and a body bigger than Ace.
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The industry had a bad second half in FY19...
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When everyone is talking about the slowdown, it is important to remember the reality. After GST implementation, there was very good growth. In the first half of FY19 too, there was very good growth. Then the government came out with the new axle load norms in July 2018.
The decision was for not only new vehicles; all vehicles in the park would be registered with a higher load. So the capacity for vehicles rose by 15-20% gradually. You can’t be in a position to get that kind of increased freight suddenly. So it started impacting the cargo segment of M&HCV.
A few other factors also contributed. One is the liquidity crisis; second, the bigger fleet owners started taking input credit on GST which they passed on to customers who started negotiating freight rates downward.
To add to this, oil prices started rising. So it was a combination — freight went down, freight rates went down, capacity went up and costs rose creating a squeeze on medium and heavy commercial vehicles in the cargo segment; tippers continued to grow. The intermediate and small commercial vehicles continued to grow but at a much slower rate.
What’s the FY20 outlook?
The overall sentiment now is certainly soft. In the medium and heavy commercial vehicles freight availability is going down due to the manufacturing slowdown and reduced infrastructure spending.
There has been a de-growth of 7% in April. One positive factor is the expected pre-buy ahead of the advent of BS VI norms from April 1, 2020.
This will begin from the second half if not from the second quarter itself. So it’s going to be a mixture of headwinds and tailwinds going ahead.
Does it worry you that the problems in NBFCs are intensifying and can impact your business?
Yes, it is a cause for worry because every CV is sold on credit. NBFCs play a big role. When they are constrained, that will certainly impact actual sales.
Is this the right time for a new launch?
This is very good timing. When the market becomes more competitive, what are the levers of competition: the product, the service we can give. We are coming out with a new product that enables us to strengthen the small CV business, which is, despite all this, in a way growing.
The choice of Chennai for the launch is interesting...
Chennai is a very important market for small CVs. A product that does well here invariably ends up doing well elsewhere also. When we launched Ace in 2005, we had launched only in south and west to begin with. TN and particularly, Chennai was our biggest market. TN has a very strong consumption driven economy.