Daimler India Commercial Vehicles Ltd, truck and bus arm of German auto giant Daimler AG, says that it is well placed to take advantage of the recovering commercial vehicle market in India. While the market went down by 60 per cent in 2020, retail sales of BharatBenz trucks were down just 26 per cent. Its market share grew strongly in 2020. The company expects to build on the momentum to achieve healthy growth in 2021. Satyakam Arya, Managing Director & CEO, DICV, spoke to BusinessLine about the CV market recovery, growth plans and the scrappage policy. Excerpts.

Is the worst behind for the CV industry?

Well, it looks like on the demand side. The market in December 2020 quarter came very close to the December 2019 level, which was an encouraging sign. In this quarter, going by January and February sales, the market will be better than the year-ago period. This shows the momentum is continuing and the market is definitely recovering. Of course, buses have still not recovered.

The bus market is still 80-90 per cent below what it used to be in 2019, since public mobility is far from the normal level. It will take 3-6 months before it comes to normal. Since the start of the recovery, we are seeing growth in the construction segment. But rigids or haulage segments struggled the most.

Though we are not there, the LCV market was recovering well too, mainly driven by e-commerce. But the scenario changed from January and we are seeing a healthy recovery now in the haulage segment – rigid trucks and tractor trailers volumes and that is clearly linked to the growing economic activities. In steel and cement sectors,the demand is picking up from the transporters’ perspective. Therefore, there is overall recovery happening.

Was BS VI transition smooth given the higher cost of trucks amid Covid-induced slowdown?

Well, frankly, it was quite smooth for us. I would say it was smoother than expected. The market has absorbed the price well. Many customers understood it. In our case, our teams did a great job as we absolutely had nil inventory of BS IV in the entire value chain. So, our dealers were also in a healthy situation to start selling BS VI trucks.

Two things helped. Firstly, customers viewed BharatBenz as a tech-savvy company and their trust in our products was strong. Secondly, though time was short for transition, we said we would not only upgrade to new emission, but also increase fuel efficiency and reliability and reduce maintenance cost. So, the package as whole has struck a good chord with the buyers. We have very good ramp up ongoing, and we believe this momentum will only sustain and get better as we move along.

How are you gearing up for the upcoming growth phase?

We started the calendar year 2021 with the launch of eight new products, including one dedicated to vaccine distribution. Other new products will now help us capture a much larger share in the truck market. There were some white spots, and since last year, we have been bridging that one by one. We will continue to increase our market reach. Even in 2020, which was a very tough year for the retail network expansion, we actually added 12 new touch points at a time everyone was consolidating the network. In 2021, we plan to add another 35-40 touch points. This expansion will help us gain new market share. Also, we have completely digitalised our customer service interface and now in the process of digitalising sales interface.

What is your take on the voluntary scrappage policy?

We are waiting for the details of that and, therefore, it is hard to say what kind of demand it will generate. Union Minister Gadkari had said there are about 1.7 million vehicles which are more than 15 years ‘ old.

Now, we have to see how much of it is now coming for scrapping and how much of that comes for buying new vehicles. Even if a person who owns an old truck, doesn’t buy a new one, but I will assume that some of them will buy a used one — 4 or 5 years old. Then the guy selling this used truck would come for buying a new truck. I would assume that a chain like this would also start and help us get some demand from the market. Finally, a step has been made and we hope it will get better as we move forward.

Is the ecosystem in place for scrapping the old vehicles?

We need to have a lot of scrap centres. For instance, there is only one such centre for the entire Tamil Nadu. So, we need players entering this segment. Secondly, we need the government to create IT infrastructure. Because any truck that comes for scrapping need to be de-registered from the database. Meanwhile, we need to create more and more awareness in the minds of the people as to why do we need to scrap the old vehicle. I would love to call it not as a scrappage policy but call it “end of life of vehicle policy” or something. People should be educated about that there is a better proposition by owning a new truck. I really hope financiers will also come forward in this effort to support it.

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