It was in December 2013 when the Managing Director & CEO of Eicher, Siddhartha Lal, spoke of a new vision roadmap for VE Commercial Vehicles (VECV), the joint venture between Volvo and Eicher Motors.
The event was the unveiling of the Pro Series trucks at the company’s plant in Pithampur, Madhya Pradesh, and Lal had reasons to be pleased.
“The foundation is top-class and we are ready to unleash a new level of professionalism going forward in the trucking industry. From our point of view, more than the hardware, it is the promise that is more important which includes (the promise of) peace of mind and support that the user does not get today,” he said.
According to Lal, transporters were having a rough deal with inadequate support from vehicle makers. “There has been a duopoly which has for decades taken the customer for granted. The time has come to change heavy duty trucking,” he added.
It was also Lal’s view that since trucking was the lifeline for many transporters, only professionalism would ensure productivity improvements and prosperity. “We are going to be the future of Indian trucking,” he said. This meant being the top truck maker from the viewpoint of processes, technology and service. “It is not about price but value. We are well placed to shake the market and everyone is a decade behind us,” said Lal.
Fast forward to the present and the trend seems to indicate that things are pretty much on track for VECV in an industry which has seen a rollercoaster ride in recent times. The top two in the form of Tata Motors and Ashok Leyland are still ahead of the rest but the Volvo, Eicher combine has been making gradual progress and is emerging the front runner among new players.
“We have had a major expansion of heavy duty business in Q2 of this fiscal. Also, the enormous amount of work done in the last few years in establishing the value proposition of our heavy duty trucks in certain segments paid off,” said Lal in a recent conference call. Strengthening of the product line up, expansion of dealerships and a strong after-sales service base have fuelled the growth story led by the Pro Series.
In an arena where sales of medium and heavy commercial vehicle sales have been slowing down, VECV has bucked the trend and grown 26 per cent with sales of nearly 14,000 cargo trucks in the first half of this fiscal. As a result, its market share is now up to 12.2 per cent from 9.5 per cent. It is here that the Pro Series trucks have been doing particularly well.
“We have introduced a number of new products in the last year and are present in almost all the segments of the heavy duty truck market from 16-49 tonnes,” said Vinod Aggarwal, MD & CEO of VECV. “With a diverse product range comprising both Pro Series and VE Plus, we can cater to all types of customers at various price points.” In addition, eight company-owned/operated outlets have been set up in regions where good third party dealerships were hard to find.
In buses too, VECV’s share in the five tonne plus category grew to 18 per cent in the first half from 16 per cent a year ago. “We continue our march forward in buses and we are the biggest player, if not number one, in the school bus segment,” said Lal.
The three brands — Skyline Pro, Skyline and Starline — have consolidated the company’s presence in the medium bus segment. In the heavy space, where its share is just 5 per cent, it has just bagged a handful of orders from state transport undertakings. Plans are now on to expand the range.
Yet, there are some concerns going forward for the industry as a whole. While GST-related uncertainties have led to postponement of sales, the expected pre-buying on account of BS IV norms has not been happened to the extent predicted. According to Aggarwal, things could even out soon.
“Yes, GST and BS IV norms implementation have created some uncertainties in minds of customers,” he said. “While there may be some pre buying due to BS IV, there may be some postponement due to GST if there is some saving in taxes. Eventually, both may set off against each other and we may see normal buying.”
Since the time Volvo and Eicher decided to join hands eight years ago, the roadmap was perfectly clear: to combine the strengths of technology and processes with the Indian partner’s skills of frugal engineering. This has led to the creation of a manufacturing powerhouse in Pithampur where both the trucks and engines will be a critical part of the global strategy.
This business model will also ensure a fair degree of protection from a cyclical industry which has its share of highs and lows. It was particularly pronounced in India through two successive fiscals from 2012-14 when numbers crashed by nearly 50 per cent and it is only now that there is some semblance of stability.