Demand is low but truck and tipper players are preparing for the revival, such is their unshakeable belief in the India growth story, reports CHARU BAHRI.
Rigid dump trucks are a staple requirement in the mining industry, in particular, in coal mining which has high potential in India since it feeds the power sector. Not surprisingly, recent turbulence in minerals like coal and iron ore has had a great impact on demand for rigid dump trucks. Other trucks and tippers find use in building, road and metro construction, in which segments some movement is still happening.
Research by Tata Hitachi Construction Machinery suggests that demand for dump trucks has dropped as much as 30 to 35 per cent over the last 4 years and the downward trend is likely to continue this year too. Industry voices affirm this trend.
Nalin Mehta, Managing Director, Mahindra Trucks and Buses says, "The mining and infrastructure sectors are very important for heavy commercial vehicle sales. Both of these sectors are currently stagnating. Mining has seen a major slump due to various legal/judiciary interventions and bans. Many infrastructure development and road construction projects are on hold. Consequently, demand for tipper trucks has contracted. Sales have fallen by around 28 per cent to 45,375 units (FY13) as compared to 62,762 units (FY12) in the previous year."
"Demand for trucks of size between 30 and 60 tonne comes mainly from the mining sector. After two very weak years, we are observing some revival in coal mining, albeit at a still low level compared with our best years. Iron ore and metal mining are still subdued. Whereas we sold some articulated haulers to mining companies in Goa last year, this year, we have sold none," says AM Muralidharan, President, Volvo Construction Equipment India. He further adds, "Demand for tippers of capacity 10 to 12 tonne originates from the construction sector. Activity on metro rail and residential apartment projects is keeping alive such demand, albeit the market has shrunk by about 20 per cent vis-a-vis FY2012-13."
"The demand for tippers is lower than what we saw last year and the segment continues to show a negative trend. Currently, demand is coming from mining (specifically, coal) and quarrying.
Demand from the road construction segment has not picked up at all, although it can be expected to improve in the short term," observes VRV Sriprasad, Vice President, Marketing, Sales & Aftersales, Daimler India Commercial Vehicles.
"Over the last 2-3 years, the Indian tipper market has remained subdued because of the ban on mining operations in many parts of the country, slowdown in construction activities as well as the RBI's tough fiscal measures," says Richard Frenz, Head of Sales, After Sales & Marketing, MAN Trucks India.
"Demand for commercial vehicles has been clearly impacted by the economic downturn. The slowdown of FY 2012-13 has further continued in FY14. Since Q4 FY2012-13, consumption demand has also seen significant deceleration, adversely impacting demand for commercial vehicles. Although cyclical slowdowns are a feature of the commercial vehicle industry, the current prolonged slowdown is creating major challenges. Y-o-Y figures for the heavy truck market have been declining for seven quarters in a row," notes Vinod Sahay, Head, Medium & Heavy, Commercial Vehicles, Tata Motors.
Continuing stress in many key sectors - such as infrastructure, construction and mining - is holding down overall economic growth, and not just the auto business. Given the pressing need to improve business sentiments, Sahay proposes, "Major government steps towards infrastructure development, construction projects, promotion of mining, clarity on investment in different segments, speedy implementation of policies, regulatory changes and procurement and developmental schemes, excise and tax stimuli, etc will strongly position India among emerging markets."
To boost mining, Mehta believes the government should quickly resolve the coal linkages problem and coal allocations. "Other sectors that are likely to spur growth are the cold chain segment, retail and consumer goods and consumer durables. Also, firm policies and bold decisions will increase demand, such as the implementation of GST, rural road development and port connectivity with logistic park development," he opines. Sriprasad is of the opinion that demand has hit rock bottom. Alongside a revival of industrial output in Q1 of next year, he expects to see a marginal increase in demand. "A stronger revival will follow when more projects in the infrastructure sector get operationalised because this will fuel demand not only for tippers but also for heavy trucks as demand for steel and cement increases," he says.
"As a result of recent improvements in controlled mining operations, we expect the tipper industry to rebound considerably," comments Frenz.
Notwithstanding the current slowdown, companies with firm belief in India's long-term prospects are expanding their product range to great benefit. "We believe in the India growth story and are confident about the long-term prospects of the market beyond the current circumstances," says Philippe Divry, Senior Vice President, India Joint Ventures, AB Volvo, who believes Volvo has become the market leader through constant innovation and quest for productivity.
A salient trend is for players to pitch productivity-enhancing trucks and tippers, with good reason. According to Sahay, "During slowdowns, customers become more discerning in evaluating product value - fuel efficiency, operating economics and lowest cost of ownership are key priorities. Also, customers evaluate the strength of the product brand and the suppliers' network strength."
Challenges like the availability of trained operators, burgeoning fuel cost, and maintenance cost etc, are putting the focus on efficient fleet management. Frenz believes this is increasing interest in higher HP tippers. "Customers already comprehend the need for higher end technology to reduce fleet size as well as minimise risk of operator availability. Better technology results in higher carriage of material in given time with minimum spend on maintenance," he says.
With powerful MAN engine and efficient drive line with planetary hub reduction, MAN's trucks work round the clock with minimum down time in off-road construction and mining applications. Rugged and capable of working in tough conditions, its products also offer high safety standards and sturdy cabins. Moreover, in the first quarter of 2014, MAN proposes to add new products catering broadly to the construction segment.
New launches In keeping with current needs, continuous product development at Tata Motors aims at developing technology rich best-in-class vehicles in each segment, which offer the best life cycle cost to customers through better mileage, improved vehicle uptime, higher resale value, best-in-class warranty and low maintenance costs.
During FY 2012-13, Tata Motors launched six advanced vehicles - Tata LPT 3723, the first 5-axle rigid truck in the country, in the 10x4 configuration; Tata PRIMA 4938 tractor; Tata PRIMA 3138K tipper; Tata PRIMA 4923; Tata PRIMA 4023 tractor and Tata LPK 3118 tipper.
At the end of 2012, Volvo launched the 10x4, 5 axles FM480, increasing payload by 30 per cent compared with regular 8x4 trucks. "This new product matches the heavier 70 tonne excavators which are finding greater usage for the removal of coal mining overburden. Improving productivity and lowering the cost of operations per cubic metre, a salient customer objective, is met through this new product," explains Muralidharan.
According to Divry, "The 8x4 range has also been improved with the launch of the Volvo FMX truck, with a 440HP engine (+40hp versus the previous model). Customers have experienced 5 to 10 per cent improvement in productivity because of higher average speed and power." Daimler is pitching trucks and tippers designed for higher productivity, which means for the same kind of work, one would require lesser number of trucks or for the same number of trucks the work can be done faster. Additionally, Sriprasad affirms these trucks deliver about 10 to 12 per cent lower fuel consumption, which make the operations of the customer even more profitable.
AMW, one of India's largest manufacturers of heavy commercial vehicles, has recently released the 2518 tipper. The model combines all the features of a premium vehicle with versatility, lower operating costs and better return on investment. It includes a sturdy drive line, bell crank suspension, efficient gear box, strong chassis and an all steel day cabin. According to RN Rao, Director, Marketing, AMW, "This new offering is the result of extensive surveys carried out in major road construction and transportation sites across several locations in Gujarat and surrounding regions. It is another example of our 'ear to the ground' approach to product design and development."
Scania has recently launched a new range of on-road haulage truck models specially adapted for the Indian market - R 500 6x4, G 460 6x4 and G 410 6X2 - and the P 410 8x4 mining tipper in December 2012. It is also in the process of establishing a complete service and dealership network across the country and introducing innovative technologies.
Premium end trucks are a major priority for Scania. "In the niche segments, fuel efficiency influences 45 per cent of the total operating cost for a capital cost only 25 per cent higher. Scania trucks are capable of offering up to 15 per cent fuel efficiency, depending on the skills of the driver and operating conditions.
To this end, we offer special training for drivers and the Scania 2 pedal Opticruise, an automated gear-shifting system for manual gearboxes," says Anders Grundstromer, Managing Director, Scania India & Senior Vice President, Scania Group.
Hitachi's EH600 35T rigid dump truck is manufactured in India and the higher category of rigid dump trucks - EH1700, EH3500, EH4000 and EH5000 - are manufactured by Hitachi Construction Machinery in Japan and Canada. Key differentiators of Hitachi trucks are options of electric drives, trolley assist, anti skid mechanism etc. The EH600 is also fuel efficient and highly productive, having been able to provide the lowest cost per tonne to the customers.
Mahindra Trucks and Buses is a relatively new player in the segment, offering heavy commercial vehicles (trucks) ranging from 25T to 40 T capacity and light commercial vehicles of capacity 4 T and 6 T respectively. Last year, the company launched Torro 25 Tipper, boasting a 9 speed gear box, chassis suitable for RIG applications and several other variants. Investments in progress worth over Rs 500 crore aim at refreshing the existing product lines and on introducing new ICVs and MCVs. Mehta shares, "Tailor made transport solutions are a top priority. Based on customer demand and emerging market needs, we have launched custom applications like a tipper with bogie suspension, haulage tipper, cement bulker, reefer etc. A slew of variants of HCVs and LCVs are on the cards. We are also focusing on increasing our geographical presence and building a strong customer service support organisation."
In recent years, AMW has recorded growth in tipper sales on the back of increase in demand from retail buyers owning between one and five trucks. To sustain and grow this trend, the company has recently entered into agreements with State Bank of India and with Indus Ind Bank for the financing of sales of the entire range of AMW medium and heavy commercial vehicles.
Rao believes this step to provide easy and competitive financing will encourage the company's highly loyal customer base, especially those with a good track record, to grow their businesses. "We will organise joint customer meets with bank officials and work closely with them to ensure that the benefits of this partnership are made available to all commercial vehicle buyers."
Coming close to customers is top priority at MAN. Providing prompt after-sales support is one of the key steps to achieve this, and includes the recent launch of a toll free customer support helpline no. 1800 3070 2424 for customers to approach the company anytime and from anywhere. "We are also continuously enhancing and upgrading our distribution network and equipping it with modern tools to make the vehicles run in minimum down time. We have been training our dealer staff with contemporary modules to augment their technical skills. Another important activity is organising service camps at strategic locations, where customers are provided free service along with discounts on parts purchases," adds Frenz. Proactive vendors are sure to do whatever it takes to make owning and operating trucks and tippers more attractive.
Product: 151 Volvo Tippers
Purpose: Contract mining
Location: District Vani, Maharashtra
Usage experience: In the early 2000s, Avtar & Co was using 25 T and 35 T HM dumpers in a coal mine project near Pimpal Gaon, in district Vani, Maharashtra. Heavy diesel consumption was a huge challenge. In 2003, the company made its first investment in Volvo tippers, with three FM7 vehicles. Since then, it has invested in 151 Volvo tippers.
"Relationship is the key to success. Those who change brand may benefit in the initial purchase but lose out later as the breakdowns and maintenance costs increase. One brand is always better in the long term. I believe in long term," says Harbhajan Singh Mann, Owner of Avtar & Co, a mining contract company in Nagpur.
To maximise vehicle uptime and driver productivity, the company insists on site support and parts supply. It maintains a good inventory of parts and avails better service mechanics. Avatar & Co has also invested in three fuel pumps to ensure the tippers run on quality diesel.
Notwithstanding the slowdown, India is the world's third-largest truck and bus market. Underlying huge potential in this segment has attracted global giants such as Volvo, Daimler, Navistar (now Mahindra), Scania etc to the sector.
Some players are waiting on the sidelines for an opportune moment to drive in. News has it that the Fiat-group's Iveco and the American Paccar are avidly scouring the market, identifying opportunities, examining the possibility of launching limited-scale local operations to gain entry into India.
Performances and strategies of the early-comers send out a strong message about the Indian trucks and tippers market. While Scania has been represented in the Indian off road segment since 2007 through a partnership with Larsen & Toubro, it established Scania Commercial Vehicles India in 2011 in order to boost its presence here in additional segments of the Indian commercial vehicle market. Anders Grundstromer, Managing Director, Scania India & Senior Vice President, Scania Group is optimistic about the current year's prospects, while saying, "India is looking at positive growth this year. The mining industry is on its way to a rebound. We expect that things will pick up by end 2014 / early 2015 as various mines open up for tenders. With expect GST reforms, improving infrastructure and industrial corridors, and the hub and spoke system coming in place, the long and heavy haulage premium truck segment will also see growth. We aim to sell about 2,500 trucks per year in the Indian market within the next five years."
Product: BharatBenz 2523 C (from Daimler India Commercial Vehicles)
Purpose: Road construction Location: Gujarat Usage experience: In the last one year, Priyajit Barad, Director, Ketan Constructions, has amassed a fleet of 30 BharatBenz 2523 C trucks for his road construction business.
After carefully studying the market, different models from Tata, Ashok Leyland and AMW, he decided on buying BharatBenz trucks. “What drew me to BharatBenz is the technological superiority. Since the trucks are available at a competitive price, vis-à-vis other models in the market, I decided in their favour,” he says.
Barad has not been disappointed. He appreciates the productivity of the trucks and has faced no problems in getting after-sales services and support. In the near future, he plans to expand his fleet of BharatBenz trucks to 50.
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