Author: Girish Wagh, Executive Director, Tata Motors
The first quarter of the current fiscal year marked an all-time low for the Indian commercial vehicle (CV) industry. The onset of the COVID-19 pandemic and the implementation of the BS6 transition slowed the industry, which was already tackling an overall economic slump, liquidity crunch and introduction of increased axle load norms. All these factors, collectively plummeted the demand for commercial vehicles, thus pushing the segment into precarity.
Having said that, in the last few months, there has been a considerable change, with the flourishing e-commerce sector that has improved small commercial vehicle (SCV) and intermediate and light commercial vehicle (I&LCV) sales. The resumption of infrastructure projects and mining activities has improved the demand for medium and heavy commercial vehicle (M&HCV) tipper trucks in recent months.
On the other side, the demand for passenger CVs continues to be low, owing to the corporates and students operating from home, and people preferring private over public transportation. In addition, the domestic tourism industry is yet to pick up pace, which is a key demand driver for buses. With these factors, the passenger CV industry is expected to have slower trajectory of recovery.
As companies gear up to tackle the rising demand and a much-anticipated boost in the CV industry, having a clear view on key focus areas is imperative to ensure a smooth and hiccup-free transition into the future.
LOOKING AHEAD AT A PROMISING FUTURE
With gradual unlocking of the economy, core industrial sectors that support the CV industry are showing significant recovery. With resumption of economic activity and a commensurate rise in the GDP to earlier levels, the industry can be expected to grow proportionately. Latest trends suggest that the manufacturing, mining and construction sector along with the realty and the agricultural sector are showing decisive growth, as of the second half of FY21. As these sectors revive, a simultaneous rise in the demand of both M&HCVs, as well as SCV and I&LCVs, can be expected. Besides, the booming e-commerce sector will continue to drive growth in SCVs and I&LCVs. Rural demand is also likely to be higher due to overall growth in the agriculture sector, on the back of a good monsoon.
These encouraging market trends and government relief measures will play a crucial role in revival of the CV sector. Earlier this year, the Indian automotive industry has successfully concluded the herculean BS6 transition, paving the way for an eco-friendly future. The scrappage policy will be instrumental in boosting CV replacement demand and providing an impetus for overall growth while benefitting all stakeholders involved. Laying the foundation for the future of this industry, the scrappage policy, in addition to bolstering sales will also facilitate cleaner and eco-friendly BS6 vehicles on the road while aiding employment at the scrappage centres. Likewise, the National Infrastructure Pipeline will enhance the growth of the entire CV industry further as there are going to be increased activities in the sector of energy, water sanitisation, communication and commercial infrastructure. Recently announced performance-linked incentives (PLI) will encourage the manufacturing sector and in turn drive the vehicle demand.
In line with its long term focus on sustainable future, the government is actively pushing for increased adoption of CNG- and LNG-fuelled vehicles, which will help in reducing emissions. Through FAME initiatives, the government has been promoting environment-friendly electrified CVs (especially buses) for mass transportation in the urban areas. Further, the efforts from companies towards rapid research and development of alternate fuel technologies will redefine the approach of the entire industry. A pragmatic and consistent regulatory roadmap will enable the industry to allocate resources for R&D of appropriate technologies, and meet larger objective of sustainability.
BEING FUTURE-READY
Looking forward, the CV industry, globally as well as in India, is expected to face headwinds such as even more stringent emission and safety regulations, and changing customer preferences. OEMs will need to focus on both, enhancing the customer offerings, as also improving operational efficiencies to sustain through the cyclicity of the industry.
A vital aspect that will spearhead the move towards the future is the willingness to incorporate the latest technologies to provide the best possible performance and customer experience. With the internet playing a pivotal role, connected vehicle features resulting in improved safety, navigation, diagnostics and efficiency will attain significant importance in the near future.
The development of a sophisticated and scalable Connected Vehicle Platform (CVP) will address the diversified applications and customer preferences of all future products. A large part of customer experience is closely connected to the comfort and convenience of operating and servicing the vehicles, as well as a number of value added services to conduct the logistics and transportation businesses smoothly. The deployment of a telematics management system and enabling services provides myriad benefits right from improving overall driver efficiency, ensuring truck and driver safety, remote vehicle diagnostics, extended life by monitoring vehicle health and driving behaviours and improving working conditions as well as business productivity considerably.
As the pandemic is now progressively receding and as the lead indicators are showing promising signs of growth, the consumer sentiment index is also improving gradually, indicating a better finish to the fiscal for the sector. This provides the perfect backdrop to launch future-ready and sustainable technological innovations that promise enhanced customer satisfaction and will play a vital role in taking the industry to new heights.
Published: 15 December, 2020 | Autocar Professional
