The likely increase in maximum axle load of commercial vehicles by 20-25% by government would not have an impact on volume for industry as overloading is happening anyway, said Vinod Dasari, managing director and chief executive officer, Ashok Leyland.
In an exclusive interview to CNBC-TV18, Dasari said there will definitely be higher costs involved for the company to tweak the vehicles and all this has caused unnecessary confusion within the industry.
Watch: Centre's decision on increasing truck load capacity is confusing for industry, says Ashok Leyland
According to Dasari, the company has designed every vehicles to carry about 25-30 percent overload, so there is need to tweak the existing commercial vehicles.
Edited excerpts: The new truck loading rules are going to apply prospectively and older vehicles will have to get an approval from the government to be able to avail of this extra load carrying permission. First up, how does this affect the industry, how does this affect your company?
It's rather confusing at this point, because somebody who has bought a vehicle, let us say for 25 tonne, that vehicle has been designed for 25 tonne, braking has been designed for 25 tonne and everything on the vehicle, chassis has been designed for 25 tonne. Suddenly, if they put in something, where people can carry extra load and saying that they will now be extra stringent on the penalties, I do not know to what extent that is possible. If they can be extra stringent on penalties, why are they not extra stringent on penalties today? If somebody is breaking the law, they should be stringent on it. So, I am worried about safety norms being violated.
If the argument that the government has that, they are overloading that much anyway today, then there should be no impact on vehicle volumes because tomorrow they will say, now you carry 28 tonne and that would be all that you are allowed to carry and it will be very strictly imposed. So, if that is the case and they are able to very strictly impose, then there should be no impact on volumes, because their whole argument is that this is only being done because vehicles are overloaded anyway.
Now, I find it a bit surprising on two reasons. One, somebody has bought a vehicle today and is going to buy a vehicle, let us say after Tuesday. What does somebody who bought a vehicle do? He has a vehicle for 25 tonne, he cannot suddenly get it registered for 28 tonne, because the brakes and everything has been designed for 25 tonne.
Secondly, I wanted to add that even in US, a one axle truck or two axle truck – the difference between India and US is 16-18 tonne. Here, we are going for 19 tonne, which is the world’s highest. Similarly on three axle trucks, we are going from 25 tonne to 28 tonne. Once again, US is only 26 tonne. So, we are going much higher than the world. I am not sure our roads can take something like that. So, if you argue that overloading is anyway happening, then put the stringent norms today.
However, this came with a further statement or rather, this is again source based information, that older vehicles will have to get an approval from the government. This is a little surprising, first of all which government. When you say government, do you mean it's an RTO, is it a state government, is it a central government, and what permission will you get it, I am 25 tonne, let me load till 28 tonne. Is that the kind of permission you should be asking?
That is probably what is being hinted, but I am surprised, because if that were the case, why they are not doing it anyway? They are saying that you should not overload because it's not safe, it's not good for the roads and so on. Suddenly, I will now give you a higher axle load to carry. I see a benefit for this, when you get into the era of electric vehicles and so on. So if at all, the government wants to do something like this, l would say do it from 2020 or something when more electric vehicles will be there and there is a higher propensity, because their battery packs are heavy and so on and that is when you need higher axle load.
However, doing it right now in the middle of all of this, when everybody is struggling to get to BS-VI and struggling with electric vehicles, it seems wrong. Between you and me, if the argument is anyway they are overloading, now we will make sure that they do not overload, but we they will only get to 28 tonne and nothing higher, then that should have no impact on the volume then.
Separately, we were told that new rules apply prospectively and for the old ones you have to take permission vehicle by vehicle. Now, if you only say that the new rules apply prospectively, how does that change the game for companies like yours? Will you all have to modify vehicles?
Yes, the other thing that nobody is talking about is that typically a 6 tonne front axle takes a 295 tubeless radial. Now, if we got to 7.5 tonne, it requires 305 radial, which is not available in India in very high volume. So, to develop that might take a year. There is no tyre capacity in India to do something like this. So that is another thing that we are all puzzled by as to what is the requirement, what is the urgency for this. I am not so sure I understand.
Did you try to reach out to the government or did Society of Indian Automobile Manufacturers (SIAM) tried to reach out to the government?
SIAM suggested that if you want to do this, please do it from a prescribed date, which is at least a year to two away along with BS-VI norms, because we are anyway all testing our products for BS-VI, so we will test it with higher axle loads. We will design the chassis accordingly.
But no question of allowing existing vehicles on the road to legalise what they should not be doing?
I am surprised how they will do that. On one hand, you could argue that let us say somebody had designed a vehicle for zero overloading, how will that vehicle stop? How will the engine carry that much more horsepower that will mean much more fuel consumption, much higher emission. If the argument is that the vehicles were anywhere carrying more capacity, which our vehicles are designed to carry more load, if that is the way, the argument that your vehicles were anywhere being over loaded, so why are you worried about it. Well then, I should have no impact on volume.
Generally, who will give the permission if that is what they are saying that fleet operators can take extra capacity but after seeking approval. Normally, who is the approving authority?
It will have to be an Automotive Research Association of India (ARAI) or Regional Transport Office (RTO) that has to be approving that.
How do you expect demand to pan out assuming this is the rule?
If they are over loading 20-25 percent, but we will become very stringent and slap then a 10 times the fine and hence, we are going ahead with this 20-25 percent increase in allowable weight, then it should not impact us anywhere. Because, they were anywhere overloading that much.
If you do try to change your current vehicles, which are going to be produced first of all will you tweak and if you do will that mean higher cost?
Of course, if you have to use bigger tyres, we have to use bigger axle, we have to use bigger steel frame section and everything has to be designed. Can you guarantee that they will not overload beyond 28 percent?
No, we cannot guarantee that at all.
Nobody can, right? So, we always design our vehicles to be at least 25-30 percent overload, because some customer will do it and we don’t want to breakdown. So, everybody would have to upgrade their vehicles and the cost will go up and if the cost go up, obviously it will be passed on.
What are you expecting say from tomorrow itself? Your dealers, will they find more demand, less demand or will it be unchanged because the rules don’t really change much for prospective vehicles?
First, I think it will cost confusion, unnecessary confusion. I think people will say shall I wait, shall I do something, but in a week or so it will all settle down. People will say wait a minute, I was anyway doing it. Now, I will be legally doing it, so let me continue to buy more vehicles.
Or will they say that I am anyway overloading and I am allowed to legally now so let me postpone the next vehicle because that is why truck makers stocks fell today?
Let us say, it's effective from Wednesday, so if I am a fleet owner, I will say I was anywhere overloading now I am legally allowed to do it, so it doesn’t affect my decision. Now, I will legally do it and I don’t have to be worried about somebody slapping me the fine, no RTO can stop me and so on.
You basically won’t expect any demand change at your end at this point?
No, I don’t expect.
At this point, we don’t require to, because our vehicles are anyway designed to carry about 25-30 percent overload. But if his trend happens and it continues, only when new tyres are available, please note that I am saying that the tyres are not available, only when they are available we will upgrade.
You will start tweaking your vehicles or changing them anytime soon or you will wait for more clarity?