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To cope with the slowdown beleaguering the automobile industry, Daimler India Commercial Vehicles (DICV) will continue to keep its costs in check, apart from focussing on its export business. But, there has been no change in DICV’s fundamental strategy due to the slowdown, nor has there been any deferment of investments, said Satyakam Arya, MD and CEO, Daimler India Commercial Vehicles.
Arya told BusinessLine that this is because the company believes that the slowdown is temporary, and also due to the Indian market being “very important” for Daimler globally. Daimler’s confidence on the growth potential of the Indian market is still intact, he said. The company has invested more than ₹5,000 crore here already, he added.
Due to the slowdown, the company had resorted to a complete restructure in its costs by making it “more resilient”, he said. It “worked aggressively” on reducing material cost of its products, whilst also working on trimming the company’s fixed cost, and this strategy will continue this year as well, he said.
BS-VI range
In 2020, the company will also focus on growing its market share with the new range of BharatBenz’s BS-VI medium- and heavy-duty trucks and buses it unveiled on Monday, said Arya. Its entire range of products is BS-VI compliant now. The primary investments in 2020 will be directed towards the expansion of product portfolio as well as digitising its customer interface and operations, he added.
Exports can be a good hedge for domestic slowdown and going forward, the company will be capitalising on more opportunities in its export business, said Arya. It will now export BS-VI compliant products too, and with this, the company will look to enter new markets where the equivalent of BS-VI emission norms are already enforced, he said.
Export focus
Since the company’s inception in 2012, it has sold around one lakh units and exported 30,000 units. It currently exports to 50 countries and the company has plans to add 4-5 countries every year, said Arya.
Apart from exporting trucks and buses, it also exports parts and aggregates, with the company having completed exports of more than a hundred million parts last year, Arya pointed out.
DICV will continue to expand its product portfolio by bringing out new product variants every year, while also working on expanding the dealer network, said Arya.
Even in the midst of the prolonged slowdown, the company added 54 new touchpoints in 2019, taking the number to 237 in total. It plans to reach 300 touchpoints by the end of this year, and also eyes to add another 50 in 2021.
The year 2020 will continue to be challenging for the commercial vehicle segment and could see a 10 per cent year-on-year fall in the mediu- and heavy-duty trucks segment, he said. In 2019, the CV industry contracted by 35 per cent year-on-year in this segment.
But, since the beginning of this month, a degree of uptick has been perceptible in the sector with pre-buying taking place, said Arya. A turnaround can be expected by 2021.
The excess capacity created in the system post the revision of the axle load norms in July 2018 continue to weigh on the CV industry’s growth prospects, said Arya.
If a scrappage policy is announced, it can definitely lead to a turnaround, he said.
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