Dawn of a New Era – The Changing CV Landscape

29th March 2017 – The day that no soul, if it had even an iota of exposure to Indian Automobile Industry, will ever forget . The day when virtually every Indian Automobile Manufacturer’s plant came to a stand still and the Policy Paralysis kicked in. This was the least of what NDA Govt., which is known for its business friendly atmosphere, could have expected.. The CV Landscape changed for ever.

Honorable Supreme Court of India banned the sale of outgoing BSIII emission compliant vehicles with immediate effect and gave a window of just 2 days until 31st March to sell off the inventory pileup of over 15000 Cr – Effectively 2 months worth of stock for commercial vehicles industry. As if that wasn’t enough, CV & Two Wheeler manufacturers were caught on the back foot on the preparedness for BSIV Emissions compliant products, wherein no breather was available to upgrade & then stabilize their production lines.

Now, eleven months since the turmoil Indian CV Space has come a long way leaving behind the losses accumulated in FY1617.

After the introduction of BSIV emission norms every quarter of the FY17-18 saw a different challenge ranging from vehicle STA approvals across the country for newly launched BSIV vehicles in Q1 to Product Establishment and counter strategies by OEMs with a question – “Who is Placed better?”

•Q2 & Q3 of FY1617 witnessed an increased industrial output coupled with further strictness on practice of Overloading leading to spurt in TIV and higher demand for high payload vehicles.

•This also saw an era of shifting preferences wherein a given section of price sensitive customers scouted for CVs with lower price tags and yet another set of customers going in for technically advanced vehicles. Yes, the advanced technology came at a premium though. These were the customers who were tech savvy enough to fully understand the impact of the two BSIV technologies SCR and EGR available in the Indian CV Space. Debate upon the superiority of SCR vs EGR is still On.

•Growth in 49T Segment within India saw a boom and with rated load becoming the norm, vehicles fitted with Bell Crank suspension gained momentum & are contributing to roughly 60% of the 49T sales.

•TIV in 37T Segment saw an upswing with exponential growth cannibalizing the decade old hot favorites 25T & 31T Segment.

•Tippers though had not been on the free run as majority of the surface transportation of Construction material shifted to 37T & 49T segments.

In totality if we consider the number of axles getting rolled out of the factories this FY the overall growth is even way higher. All thanks to the Govt’s focus on Road and Infra Projects.

•Held-up Road Projects are being cleared at a pace seen never before. Check Post stands abolished for inter state smooth passage. Government at the center is hell-bound to bring a turnaround in the country.

•There are always two sides of the coin. This changing landscape coupled with demand of high tonnage vehicles has now led to the change in ownership periods. Increased acquisition cost has led to higher fixed cost with stressed disposable income in hand leading to higher payback time.

•In the past a Heavy Duty CV saw 3-4 ownerships with first owner plying the vehicle for 4-5 Years. Today, transporters are vowing to ply the vehicles for periods extending beyond 6 years owing to high acquisition costs.

•Due to higher plying periods/rated load applications need for more reliable vehicles kicks in. CV Manufacturers increased the Warranty period of the vehicles giving confidence on the Reliability Part of the products.

•Transporters are looking for value for money features at relatively lower cost in trucks. Average age of Trucks in fleet will see an increase and TCO is what will matter the most.

Gone are the days when Transporter/Driver settled for not so good looking Trucks and now are considering comforts like AC, Cruise Controls, Projector Head Lamps, Reverse Parking Cameras & Sensors for their trucks. All said and done still it’s long way to go and probably the best is yet to come.

 

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