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This article is more than 2 year old.

New regulations like BSVI and axle load norms making us more cost-competitive, says Mahindra truck and bus division CEO

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The slowdown in the auto sector has hit the commercial vehicle segment – a mirror to the state of the economy – the most. Data from the Society of Indian Automobile Manufacturers (SIAM) for the month of September showed that CV sales declined by 22.95 percent in the April-September quarter, while the M&HCV segment de-grew 35.79 percent in the same year.

New regulations like BSVI and axle load norms making us more cost-competitive, says Mahindra truck and bus division CEO
The slowdown in the auto sector has hit the commercial vehicle segment – a mirror to the state of the economy – the most. Data from the Society of Indian Automobile Manufacturers (SIAM) for the month of September showed that CV sales declined by 22.95 percent in the April-September quarter, while the M&HCV segment de-grew 35.79 percent in the same year.
Recent regulatory changes like increased axle load norms and the imminent transition to a cleaner fuel regime have given a cost competitiveness advantage to M&M, according to Vinod Sahay, CEO, Mahindra Truck and Bus Divison.
“With the new axle load norms, industry leaders are being forced to upgrade to power to weight ratio, that adds cost to them, not to us because we are already at 274 horsepower. We are the only company that stopped producing trucks under the old GVW norms.  We could do that because our cost increases were minimal. Now, for example, if it costs the industry X to move to new axle loading norms, it is 10-15 percent X for us”, Sahay told CNBC-TV18.
Mahindra’s Truck and Bus Division has recently attained nearly 5 percent market share in the haulage segment, dominated by Tata Motors and Ashok Leyland (together controlling over 85 percent of the market) nine years after its formation.
On the initiatives the government has taken to revive demand in the auto sector, Sahay said they’re a medium-term play and will not impact demand significantly. “Recent initiatives announced by the government will have a medium-term play in the economy. Most of these initiatives can’t have a short term impact, like the corporate tax rate reduction. Even an increase in depreciation doesn't add a huge amount of value to CVs. Fleet operators won't buy an additional truck if it has to stand idle. They are however good steps which will have a positive impact over two quarters if not more”, Sahay told CNBC-TV18.
Elaborating on the strategy M&M has been adopting to phase-out BSIV production and ramp-up BSVI production, Sahay said the company isn’t banking on substantial pre-buying.
“We are ramping down BSIV production quite aggressively. We believe we were the first one OEM to start doing down stocking of dealers in September-October last year itself, we could see the signs of a slowdown. The industry was negating axle loading norms will not have an impact, while we at M&M were clear it will have a substantial impact.” He said, adding, “Our dealer stock is very comfortable at just about 25-35 days, at the low level of retail that we have. If some pre-buying happens and there's a 10-15 percent increase in the coming few months, our stock will be down to 15-20 days entering Q4.”
Sahay said the company is targeting a 10 percent market share with the Furio and Blazo over the next couple of years.
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