Globally, Scania manufactures heavy trucks, buses, coaches as well as industrial and marine engines. In India, Scania has many sales and service points through L&T. Newly formed in 2011, Scania Commercial Vehicles India is establishing a plant for bodywork and the outfitting of complete vehicles. Henrik Fagrenius spoke to Sandeep Menezes on the Swedish company’s investment plans in India.
What are Scania India’s plans for the growing market for heavy commercial vehicles?
With the highway infrastructure improving and the hub-andspoke model gaining increasing acceptance, the domestic truck industry is witnessing polarisation, with growth in the HCV segments outperforming the overall industry growth rate.
In the M&HCV segment, the share of heavy-duty, long-haulage trucks is witnessing a steady increase in proportion to the total M&HCV volumes. Within the M&HCV segment, the demand for tractor trailers has been strong, reflecting the improving demand from container applications, and the steel, cement, and construction industries.
The tipper segment within the HCV segment has also benefited from the gradual recovery in demand from construction and mining activities over the past few quarters.
Scania will be entering India with global products or global technologies, which are highly advanced technologies. And, in this space, we have very little competition. Scania envisages around 2,000 heavy haulage trucks and 1,000 intercity buses and coaches to be rolled out from its plant within five years.
Scania is also preparing to sell engines to its OEM customers. These engines are more compact, resulting in lesser fuel consumption, leading to lower emissions.
Can you shed light on your proposed investment of Rs.150 crore for setting up a manufacturing facility?
Scania plans to invest 1.50 billion in the coming year alone to tap the growing commercial vehicles market in the country. This new plant will serve as a complete knock down assembly unit for truck and bus chassis during phase-I of operations. But, bodybuilding of city buses and coaches and service workshops for trucks and buses will also be part of this facility at a later point of time. Scania will employ up to 800 people in this facility over next five years.
Does Scania plan to introduce new truck models?
Scania intends to launch three on road models for long haulage. They are aimed at professional customers, and believe that the niche segment that they are aiming at may be small at the moment but will grow.
Apart from the 410hp 6×2 prime over, Scania in India is planning to launch a 360hp 4×2 tractor trailer and a 500hp 6×4 tractor trailer.
Of the three, the first to be launched will be the 500hp 6×4 truck. This long haulage truck will cater to oversized bulk haulage market. Trucks that cater to this market are referred to as ‘Pullers’.
How has Scania’s on-road models fared in India?
Scania’s relationship with L&T has enabled the tipper model to make inroads in the country, and garner around 30 per cent market share.
The advent of international players in India has led to stiff competition with cost pressure on manufacturing side and selling pressure on the price side.
A recent report says that the competition among commercial vehicle manufacturers in India is expected to intensify as international OEMs raise the bar in terms of technology, quality, durability and reliability; while domestic OEMs invest to upgrade products and technology, strengthen dealer relationships and loyalty, reinforce distribution networks, and build new competencies to defend their market shares.
There is huge potential in India to accommodate large players and the market is expected to grow. Scania will bring its global expertise to India with customised value offerings focusing on Total Cost of Ownership.
The growing investment on infrastructure development and expansion is expected to have both short and long-term impact on the commercial vehicles market growth in India.
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. In the short term, there would be immediate demand for heavy commercial vehicles like construction and infrastructure trucks as well as for mining trucks due to the growing need for raw materials. The demand for anything related to construction and infrastructure will go up. The demand for tippers, trailers and transit vehicles for road and airport construction has started to grow significantly. In the long term, one can expect a positive effect on the economy and consequently the heavy commercial vehicles sector is expected to grow on the basis of infrastructure already in place.