Scania is one of the world’s leading manufacturers of trucks and buses for heavy transport applications, and of industrial and marine engines. It is an international company with presence in more than 100 countries.
Anders Grundstromer, Managing Director, Scania CV India & Senior Vice President – Scania Group told Sandeep Menezes that the premium trucking segment is not witnessing a huge slowdown – the type being witnessed in mass market segment.
Excerpts from the interview:
The trucking segment is witnessing no growth due to infrastructure projects not taking-off. Going forward, how do you foresee the scenario?
In the case of Scania, we are only in the premium segment – both in case of trucks and buses. In the premium segment, we are not witnessing a huge slowdown – the type being witnessed in mass market segment.
Specifically, the premium buses segment has been witnessing an increasing market in last two years – therefore we are very optimistic that the growing middle class will demand safer and qualitatively better transport options. We expect the market to grow minimum five per cent per year in the premium segment.
The mining sector is not witnessing much activity in recent months. How has this impacted demand for mining trucks?
I don’t agree. This year the government has given more concessions than whole 2011 and 2012 together. Therefore we feel that the mining sector is coming back.
Some other global trucking companies in the premium segment have introduced lower priced models to gain bigger sales volumes. Going forward, does Scania intend to enter the mass market segment?
Scania will always remain in the premium segment of the market – but we will remain competitive against whatever the competition is doing. Now we can be competitive with our Total Operating Economy (TOE) concept when it comes to cost per kilometer or cost per tonne. Therefore although we are priced much higher than the local Indian competition – our products are competitive on the basis of TOE concept.
But do Indian customers understand product lifecycle costs or still only look at initial product price?
Not everyone understands product lifecycle costs. But many of the bigger logistics transport and bus customers – they understand it. They understand that the biggest cost for a truck or transport company is in fact related to fuel costs. Since Scania has the best fuel consumption in the market and better residual value – therefore customer understand that Scania is better in terms of costs per kilometer than local Indian companies.
Since Scania is only going to focus on the premium segment, how much growth do you foresee for the company?
We have capacity for 2500 chassis and 1000 bus bodies. I hope that this capacity will be sold out as soon as possible. We already have a 20 per cent market-share in the premium segment currently. We intend to reach 30 per cent market-share next year.
Since manufacturing costs in India remain lower than many other locations. Going forward, do you intend to export from India?
Absolutely. Our investment in India is long term. Scania has proven that wherever we have invested we have remained in the long term. But currently, everything we produce is sold in India. But from next year, we intend to target the SAARC nations for exporting our products. But India will be a hub for Scania in Asia – maybe even Middle-East and Africa.
Going forward, does Scania intend to launch any new products?
You will witness our brand new product coming out soon. It will be a city bus powered by ethanol. We are the first supplier in India who can provide products with Bharat V emission levels. It takes away 70 per cent of the CO2 and we produce the ethanol in India from waste.