The Indian commercial vehicle industry is considered to be the barometer of the country’s economic growth and progress. As the second wave of Covid-19 gradually subsides, there are signs of uptick and pick-up in activity in this segment too. On July 29, Autocar Professional hosted a virtual CV Conference, where industry leaders representing OEMs, Tier 1s, and finance sector discussed and deliberated key issues and future growth drivers.
The discussion at the webinar was kickstarted by a keynote address by CV industry veteran and Director of Volta Trucks, Dr Seshu Bhagavathula. He highlighted the top five trends in the CV marketas:
Telematics: Bringing connectivity, consolidation of data, efficiency and driver-related, fleet-related and the OEM-related services.
Vehicle Architecture: Changes will happen when there is a complete move to electrification. it is possible to see completely different under-the-hood architecture. Modular the buzz word in terms of vehicle architecture.
Efficiency: Includes driver behaviour making an impact, almost 15-20 percent difference between two drivers. Powertrain and vehicle efficiencies other two aspects that play an important role as is route optimisation.
Electrification: Vehicle ownership models crucial, expect big disruption. Battery and fuel cells other key aspects to consider in future. Efficiency of a battery vehicle is 94 percent, fuel cells’ efficiency is 59%. Need to strike eco balance between batteries and fuel cells.
Technology: Vehicles will have to be more reliable, Truck capacity, efficiency and lowering the TCO of trucks.
These pointers set the agenda for the first session of the day that focused on the key growth drivers for the CV segment.
Session 1 – Driver of Growth
While the first few months of 2021 offered a glimmer of hope, the past few months have been rather challenging for the CV segment, given the lockdown across states and lower freight volume. Vinod Aggarwal – MD & CEO, VE Commercial Vehocles said: “The past 3-4 months were extremely difficult for CV customers. T\here has been a nearly 50 percent increase in diesel price and business has been less than normal due to lockdown. This also led to desperation amongst customers. Small operators were impacted badly. OEMs have also seen significant cost spike due to commodity prices, lower volumes, regulatory norms like the BS VI, andaxle load norms. Industry is coming out of the woods but the past 3-4 months have been challenging.”
Diego Graffi – CMD, Piaggio Vehicles added that, “Cost structure, technology, meeting emission norms, raw material prices, fuel prices impacted demand for new vehicles and overall operation of daily number of vehicles plying on the roads. It is down by 50 percent compared to pre-pandemic levels.”
Aggarwal expects the CV industry to perform much better going forward given the “need for replacement. We see a big opportunity for the CV industry due to huge scope of replacement in future. Road infrastructure will play a key role in overall logistics growth.”
Anuj Kathuria – COO (M&HCVs), Ashok Leyland too seemed upbeat about future prospects. “I eExpect growth in the CV sector going forward. The National Logistics Policy says 14 percent of India’s GDP going to logistics spend is not viable. The government targets to bring it down to 8 percent. Lots of effort to make the sector more viable. Need to make freight operation viable for operators. Focus needs to be on making road transport more efficient for freight.”
He believes that the government impetus on National Infrastructure pipeline will help in creating demand in construction and mining segment. But he added that the industry has to “look at removing inefficiencies in the system. There are lots of bottlenecks in the infrastructure still. Though the pace of road building is increasing, there are pockets of congestion and proper implementation, faster turnaround time is important. The entire ecosystem has to participate to improve overall efficiency. Technology innovation is crucial.”
Piaggio's Graffi too agreed about the future prospects. he said, “The fundamentals of the three-wheeler business are very robust. Factors that would help boost demand include financing, affordable fuel like CNG and more CNG pumps and government support crucial. 400 CNG pumps came up in 4 months.”
In fact, the choice of fuel has become a key consideration given the recent spike in diesel and petrol prices. The bias is veering more towards affordable and greener options like CNG and electrification. Nishant Arya, VC & MD, JBM Auto elaborated on the changing landscape of technology, “Clearly, the higher fuel prices and challenging operating cost and capex position have led to the end customers becoming prudent. I see an uptick in the demand for CNG vehicles. EV policies from various states are a positive development. Multiple companies are entering this area and the sector is maturing. Demand creation is crucial to make electrification and CNG viable.”
Though JBM Auto is “focusing on CNG and electrification and provide end-to-end experience to our customers,” he reiterated that “dedication and focus are crucial in driving the operation economics in the market. Technology development needs to have a collaborative approach across CV sector.”
While commenting on the government support to push EV across India, Graffi added that though it is a positive, the policy needs to be industry oriented and not segment oriented, "Many Indian states have introduced EV policies, most of them focussed on two-wheelers and not so much three- wheelers. I believe such policies should not be segment-oriented but industry oriented. All vehicle segments should get the same treatment. Dealing with multiple levels of Government policies remains a challenge. Simplicity and transparency of government policies is crucial to push EVs.”
Essentially, this calls for more collaborative action on better technology to adapt to future challenges and that set the tone for the next session of the day.
Session II – Changing dynamics and new innovations
It is common understanding that Covid-19 has brought about some dynamic changes across industries. The CV industry is no exception. Digitisation, greater connectivity and bigger traction online are some of the key themes that have been buzzing but innovations have become the order of the day for the CV segment.
Aniruddha Kulkarni – VP & Head- CV Engineering, Tata Motors said, “Going forward, we see changing regulations, safety aspects and environmental factors along with the change in customer demand driving frugal innovation across the CV industry. The migration to BS VI from BS IV was a major learning experience. Customer needs and convenience, better fuel economy are also important consideration apart from the regulatory migration.”
Sanjeev Saxena, President- Automotive Technologies- Schaeffler India added that “Cost is a key factor in terms of the dynamics of the CV industry in India. We need to strike the optimum balance between affordability, technological advancement and competitive abilities. Connectivity and electrification are the primary trends to watch out for in the CV space. Technology intervention plays a crucial role. ”
But it is not just about innovation in technology or changes in the manufacturing dynamics. Even financing and lending parameters are undergoing a sea change in the CV sector. This is particularly striking given the financial uncertainties in the current scenario. According to Ramesh Iyer, Vice-Chairman & MD, Mahindra Finance, “Lending dynamics are evolving , from being the enabler we see need to become demand creator. See ‘phygital’ becoming a reality going forward. Lending will have to focus on consumer rather than what you are lending. Financiers have to move away from being product financiers to solution providers. Financing has to move past cyclical factors. Growth of the CV industry inevitable as these are need based livelihood products.” He sees a rising possibility that, “The subscription model could gradually make inroads across the CV segment given the final constraints and uncertainties.”
Highlighting the top trends that would gain prominence, Kulkarni said, “adaptation of features that can enhance driver safety take prominence but the use case of autonomous vehicles in India will be very different. The road condition will play a crucial role. Localisation of technology a key factor. Every category needs different treatment and approach for autonomous driving as well as electrification. Feature enhancement important for faster adoption. Connectivity and HMI enhance other future growth drivers. See R&D focus on zero emission vehicles and introduction of modular platforms.”
Saxena signed off with saying highlighting the need to enhance the efficiencies across the CV industry, “The Indian CV industry needs to play catch-up in terms of technology. OEMs have to ensure that efficiencies and value in terms of returns need to be enhanced. Industry have shown tenacity to bounceback, see growth coming back in this space.”
Autocar Professional thanks all the panellists, the audience and technology partner Schaeffler for making the 2021 CV Conference a successful event.