In 2011, Scania established the company Scania Commercial Vehicles India Pvt Ltd in order to boost its presence through sales to additional segments of the Indian commercial vehicle market. Since then Scania has launched a range of on-road haulage truck models specially adapted for the Indian market.
Anders Grundströmer, Managing Director, Scania India and Senior Vice President, Scania Group told Sandeep Menezes that the current demand in the truck industry is about 130,000 vehicles and it is expected to grow by 300,000 in about 5 to 10 years.
Excerpts from the interview:
What is Scania’s future business strategy in the Indian market? Recently, Scania achieved the delivery of its 150th tipper. Going forward; does the company have any growth targets?
India is the 6th largest market for automobiles and commercial vehicles in the world. The opportunity in the Indian market is immense as the market is opening up for premium commercial vehicle players in a steady pace.
The current demand in the truck industry is about 130,000 vehicles and it is expected to grow by 300,000 in about 5 to 10 years. With this demand we aim to capture 35 per cent of market share in the premium truck segment. The demand for heavy duty mining trucks is expected to grow up to 30 per cent where the demand for tippers is about 1000 units a year. Our current market share in the mining segment is about 36 per cent and we aim to capture close to 50 per cent in next two years.
We have had duopoly existing in the M&HCV market for quite a few decades now with two players holding nearly 85% of the market share. Going forward, how do you foresee the M&HCV market evolving?
Reports suggest that the competition among commercial vehicles manufactures is expected to intensify as the international players are raising the standards of the technology while the domestic players are focusing on establishing stronger network support, wider dealership and increased customer loyalty. We see this as an opportunity to grow in the Indian market, as India has huge potential to accommodate large players.
We are not looking to compete with domestic players whose focus is more towards non premium products. We offer premium products, and our vehicles comply with global standards in terms of performance, comfort, safety and technology. We at Scania promote concept of Total Operating Economy (TOE), all our products offer superior TOE in comparison to other premium vehicle manufacturer. Most of the M&HCV manufacturers focus only on providing low cost products, compromising completely on performance and quality, while Scania on the other hand offers products with superior TOE which helps our customers to reap profit in the long run.
The increased investment on infrastructure development and expansion is expected to have both short and long-term impact on the commercial vehicles market in the country. Tell us about it?
Factors such as GDP, momentum in highway construction, availability of bank credits and interest rates determine the growth in the local market. With current ambition level in development and investment in the infrastructure, it is imperative that M&HVC industry will also grow and government’s focus towards infrastructure development is also helping in gaining investors’ confidence. The commercial vehicle market will be driven by infrastructure development and there will be raise in the demand for heave duty and long haulage trucks.
Across India, we find that mining trucks are still overloaded and poorly maintained. Therefore does the Indian market requirements for mining trucks differ vis-à-vis other nations?
It is true that trucks and tippers in the mining sector are over run and exploited. The mining industry runs around the clock and the vehicles employed in the sector needs to be sturdy and well built, offering high performance. That’s where Scania steps-in with a promise of offering better transportation solutions. Our products performance is outstanding, offering excellent Total Operating Economy and Scania is the first tipper manufacturer to offer the Scania Opticruise, two pedal a fully automated gear-changing system for best fuel efficiency and ease of driving. Our delivery of 150 Scania P 410 8×4 Tippers to BGR Mining and Infra Pvt. Ltd. in less than six months is a testimony to superior Scania products.
The advent of international players on the Indian scene has led to stiff competition with new cost pressure on the manufacturing side and selling pressure on price side. Comment.
Like I said before, Scania products are premium range of trucks and buses. Customers, who understand the importance of vehicle performance with equally good Total Operating Economy, will certainly opt for Scania, and we are constantly educating our customers and the prospective customers on the same. When there is a realization among customers about the TOE, I believe there will not be as much pressure on the price side.
Interest rates have started to soften although they remain high, and most M&HCV sales happen through financing rather than self purchase. Therefore do you think it will boost growth in the industry?
Factor such as trends in interest rates have great impact on the growth of the market both in short and medium term. Further relaxation of the interest rate will of course catalyze the sales increase of the M&HCV. Another interesting offer that our customers can avail is leasing of our trucks.
Within the overall M&HCV market, tell us about the market-size of the premium segment that Scania is targeting? How will this premium segment grow vis-à-vis the M&HCV mass market?
We aim to capture 35 per cent of market share in the premium truck segment. Customers these days are constantly looking forward to products with superior quality. Having said that premium commercial vehicle segment is steadily expanding in India.