‘No new product is designed at Wabco without having Indian engineers participate and contribute.’
Jacques Esculier, Wabco’s global chairman and CEO, speaks to Sumantra B Barooah on the implementation of new safety norms for commercial vehicles in India.
Jacques Esculier, Wabco’s global chairman and CEO, speaks to Sumantra B Barooah on the implementation of new safety norms for commercial vehicles in India and the role that Wabco India is set to play in the company's global growth.
India will soon implement new norms for CVs that will enhance safety levels. From a supplier’s perspective, it’s good news. How do you see this progressing April onwards?
The April mandate covers only new truck models and by October, the entire range of trucks will be covered. India is a major cornerstone to enhance road safety. Statistically, India apparently has one percent of the fleet of trucks and buses in the world but has 8 percent of fatalities that involve trucks. It appears that the government wants to address this issue.
If you want to do so efficiently, one has to start with anti-lock braking systems or ABS. The ABS not only provides a safety environment on the truck that is very basic and fundamental but opens the door to the suite of technologies that we have developed in Europe. Some of these have been developed in Europe and include drive stability controls to collision mitigation systems and lane departure and warning systems. The entire suite of functionalities that enhance safety will drive the industry in 15-20 years to autonomous driving. That's why I think it was a wise decision.
Brazil took the decision to implement ABS two years ago and now China is actually increasing the mandate for ABS from a third of its fleet to three-quarters. So there is movement across different regions globally to adopt ABS because everybody recognises its importance. It is not easy to introduce something that costs more money, a phenomenon that we have seen in every country that has done ABS. People have good reasons to postpone it or not do it but once mandated by government, it can limit significantly the number of road fatalities.
From a business standpoint, we benefit but the objective to push for ABS is not just to benefit from it but also to bring to India what so many different countries have already recognised and implemented. We are now seeing a road map in which we can introduce other technologies such as stability control and collision mitigation systems. We are in talks with some OEMs for this but it will not obviously be our mandate but more of an option. So we are offering a full catalogue of capabilities of Wabco for India.
Brazil is part of the emerging BRICS markets. What has been the impact after the ABS regulation there?
We have just launched it last year and so it is perhaps early to make an assessment. The numbers may not be too high Brazil is going through a slowdown like that of India two years ago, losing 40-50 percent volumes. In comparison, the numbers for the US and Europe are compelling.
Some European OEMs have showcased the Advance Driver Assistance Systems (ADAS). Do you see it becoming a reality in India?
If we try to impose ADAS in India arrogantly, it will not work for two reasons. One factor is the cost, the second is the functionalities in the way to address those situations. If one installs a European collision mitigation system on an Indian truck in a traffic jam in Delhi, I don’t think it is going to be helpful. So we have to redefine the system’s specifications and align it with the Indian environment. For India, costs are an issue and we all are working because that’s major vector for research and development.
The challenge for Wabco is to take all these advanced technologies developed for the western CV world and provide them at the right spec and right cost for emerging markets, and for India in particular.
To achieve optimum cost valuation?
Yes, to make the value proposition attractive, credible and legitimate in the Indian market. We are working at providing the right product because collision mitigation system is important. It plays a key role involving rear-end collisions – like a truck that did not perceive that the vehicle in front has either slowed down or stopped due to a traffic jam or something else.
Typically, those accidents take place early in the morning on freeways when the drivers are fairly drowsy. That’s when the collision mitigation system works at its best. We have sold 100, 000 such devices, and in the US the fleets which have adopted them have validated that it can prevent 80 percent of rear-end collisions. So, it has a huge impact on road safety and we would like to bring it here.
Is your Indian R&D team is working on hitting the right price-value equation for technologies such as collision mitigation or lane departure warning system?
We are already in discussions with truck manufacturers in India to see how we can develop a concept around the ADAS that can meet India’s requirements in terms of value cost versus value. Our Indian engineers are contributing highly to the task.
What role do you see your Indian subsidiary playing in the overall global schemes of things in terms of revenues and beyond?
Wabco India already plays an essential role. About a third of Wabco employees live in India, so it is the largest among Wabco. About 40 percent of Wabco India’s revenues come from exports. A lot of our products for the world are designed by engineers in India.
No new product is designed at Wabco without having Indian engineers participate and contribute. European engineers are very talented and focused in developing new technologies. The uniqueness of the Indian engineers resides on their ability to design low-cost products. Optimising design for cost is one of the Indian team’s capabilities.
What are the kind of products developed here or where do Indian engineers take the lead?
Some examples include actuators and clutches but we also have the more traditional mechanical systems where actually the India team takes the lead.
Wabco has been a close associate of Tata Motors in its truck racing initiative. How does this gel with your overall business plan and strategy?
An activity such as this has several purposes. Firstly, India is an important market. Right now it represents just 7 percent of our revenues. However, when you look at the average content of Wabco products and systems to support safety systems and efficiencies of CVs, we are selling one-tenth of those products in terms of average content per vehicle in India as against Europe. This gap will close as the Indian market upgrades in terms of capabilities, standards, and technology in its trucks, buses and trailers, meaning that this will be a large source of revenue.
In recent years, Wabco India’s revenue coming from the Indian market has outperformed the industry growth by more than 20 percent; this means whatever the volumes of trucks and buses built in India, we grew 20 percent of India.
More penetration and bringing new technologies, that means the 7 percent of overall growth. It's a very, very important market. Plus, we believe truck manufacturers would grow increasingly outside as exporters. So we want to accompany those manufacturers everywhere to export so this business is really essential. Also, of course, we have to leverage the capabilities we have developed for the Indian market to support Wabco’s global engineering and manufacturing.
How do you see India growing by 2020?
India will continue to grow. We believe the industry will itself grow. The number of trucks and buses built in 2014 is still 30 percent below that what it was in 2011. There is ample room to grow. This economic recovery and growth that we believe is on the rise will support that market growth. We are here to support market growth and given our 20 percent growth, we are on a good wicket. There are some other markets that are doing well, such as the USA but it will grow but I cannot give a figure as it depends on other market dynamics.
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