Mahindra Trucks and Buses Ltd is a wholly-owned subsidiary of the $15.4-billion M&M Group which recently decided to invest Rs.500 crore over three years to strengthen its presence in the commercial vehicles segment and merge its truck and bus business with itself. It will also complete rebranding its commercial vehicles by October. Nalin Mehta, discusses the current and evolving scenario across the Indian trucking sector with Sandeep Menezes.
How do you foresee demand for transportation evolving?
The consumption patterns are such that upcountry consumptions are going up; therefore, smaller consignments have to go into ICVs (intermediary commercial vehicles). I think HCVs will grow for sure which is the reason we invested in HCVs. Once the infrastructure sector starts moving again, as it had picked up pace three years ago, we hope that change will happen.
I suppose heavy commercial vehicles are the most affected segment.
HCVs are affected because of infrastructure, port movement, import and exports, and an economy going down. While the consumption story thus supports the smaller functions, the infrastructure story supports the big consumption (HCV) pattern. Hopefully, it will change in the near future.
The last few decades have witnessed the top two players cornering nearly 80 per cent market-share in HCV segment. With the advent of new players, how do you see the scenario unfolding?
A duopoly market by its very nature welcomes new players. We don’t see the market growth today but it can’t continue like this. First, there will be space for new players and more players to enter the market. Second, the modernisation of trucking industry is already on its way in spite of the current downturn. New players like us who have the opportunity to develop current and futuristic technologies will benefit from it.
Recent figures indicate that growth has eluded the HCV segment since last 16 quarters. Is this an alarming situation for new players like Mahindra Trucks?
There is, of course, a huge co-relation with GDP growth. There is also a deeper co-relation with infrastructure development, ports, roads, mining etc. This situation cannot last for long. Sooner or later, this situation has to reverse; otherwise the entire country will be in trouble.
With the domestic economy looking gloomy, what would be your export strategy?
We are already exporting LCVs to SAARC nations. We have already achieved a good market-share and health standing in SAARC region because of our product quality.
In terms of exports to other nations, we will look at South Africa as our entry point for exporting HCVs because it is a right-hand drive market. Having said that even those markets are not in a good shape today.
The entire trucking segment is facing a challenges phase. Going forward, does Mahindra Trucks have a strategy to ensure its future growth?
At this juncture, the important thing is to establish the product and make sure that it goes to all segments and performance is appreciated. We are progressing extremely well on that front. It is not so much about volumes and market-share as you think. We are here for the long term and the short-term downward trend is not a good way to judge it.
We are now in cement. We have done successfully in steel and also port operations. We have now introduced the boggy tipper which gives me a little more tipper application. Therefore, I am going application by application. We have to establish our product in various kinds of applications. We need to also establish our operating economics with the transporters. We also need to establish confidence in terms of service and backup.
In this challenging economic scenario, the main differentiator will be product quality and after-sales support.
We already have 270 authorised service points. Nobody has been able to manage this so fast. By end of this financial year, we will have almost 400 service centres. We have already trained 1,200 mechanics who are connected to my call centre. These are not roadside mechanics. They are connected to my call centre. If there is a breakdown, these mechanics will be called and they will reach the site. We are reaching nearly 80 per cent of our customers anywhere in India within 44 hours; nobody has been able to do that.
It is much more important to take targets today for establishing service processes and establishing uptime guarantees. In the Golden Quadrilateral, I am giving an uptime guarantee of 48 hours after which I will pay per day and my performance has been 100 per cent; I have not paid a single rupee. It is much more important to take targets of this kind and we have taken targets of this kind.
How has the recent diesel price deregulation and hardening of interest rates impacted the HCV sector?
We are in the transport sector where the cost of operations is going up. It will certainly impact customers because he will take time to get a price increase from his customers. To that extent, for me, it has a kind of a negative connection. But if you look at the larger economy, it is better to have market-led pricing for diesel.