What is Volvo’s aim in setting up the Technology Centre in Bangalore?
There are two aspects to this — to outsource IT, which we have already started, and for new product development. This will help us to stay closer to the customer while developing new products for Asia and in turn benefit the Volvo Group since the twin objectives are fulfilled.
Volvo trucks have not made much of a headway in India? What are you doing to change this?
We believe in growing continuously. We have been in India for seven years now and have had some ups and downs. It is a great learning experience. But we do enjoy very high success in certain niche markets that demand high-performance trucks that are reliable, fuel efficient and can haul huge payloads. A case in point is the mining and construction equipment sector, which we dominate. Another segment we dominate is in ‘overdimension’ vehicles where the volume and weight-carrying requirements are very high. We are present in the long-haul tractor-trailer segment too and have a substantial number of loyal customers. With India’s road development programme being implemented at a faster pace, we believe growth for us will be significant in the years to come.
Is Volvo India’s transformation from truck- to bus-maker a strategic shift?
No, it is just a perception. Buses are more visible to people than our trucks used in the mining and construction equipment sectors. Where we are not well known is the construction equipment sector that gives us our biggest business. We have sold over 600 construction equipment, a little less than that in trucks and about 400 buses last year. So in sales volume and revenue terms, buses constitute third position. We are happy with all our business areas.
What is your plan for the construction equipment division?
This year we plan to introduce new machines to complete our product portfolio ranging from compact excavators upto 70-tonne excavators. We also have wheel loaders and motor graders. We have a 13 percent market share which is very high because we import all the equipment and sell at a premium price.
What is the response to your City Bus procured by Bangalore City Transport?
The response has been very good so far and people are migrating from three-wheelers to the City Bus, which provides easy access. Being air-conditioned, noise pollution and dust are minimised. Passengers are willing to pay more for the comforts they get and it will be a good value proposition for operators.
Do you have plans to introduce low-tonnage vehicles in India?
While we do not have any concrete plans for that now, we are looking at opportunities where there is a demand for specific features in some segments that the Volvo Group offers.
With Mercedes-Benz’s Actros slated for launch and some other brands planning to enter India, how do you propose to meet emerging competition?
We are keeping our eyes wide open. We are testing the competition’s trucks and buses against our range of products and matching them to see if we need to make any changes in specifications. Our primary concern is to maintain high customer satisfaction. Launching a product is not the only thing but it (the product) has to be the customer's best business partner. Having been here since seven years, we have a competitive advantage in all these parameters. We welcome rivals because they will also be developing the market. Customers today look at the total cost of ownership rather than only the price of the product.
What are the learnings from the recent accident involving a Volvo bus?
Volvo satisfies all safety requirements. What happened there could have happened to any bus. There was a safety window in the bus but as the accident took place at night, the reaction of passengers, most of whom were asleep, to utilise the safety window was slow. Investigations are still underway and we cannot pre-empt anything now. We comply with all the regulations in force now and if any new ones come up, we will be the first to introduce them.
Volvo India largely follows European safety regulations. Don’t you think India needs a different approach?
We're trying to drive the process of change here. For instance, we are requesting the government to introduce certain safety norms like a crash test for truck cabins.
What about component sourcing from India?
We are open to any proposal for sourcing components but the price has to be very competitive, to the tune of 30 percent, since it is necessary for us to consider the landed cost of components and vendor development programme to make them supply as per our specifications. We have sourced $30 million worth of components in 2005 and this year we plan to source about $70 million. At this rate, we will cross the $100-million mark in 2007.