‘Nurture skills for sustainable growth’
Volvo Group, being the third largest player in CV industry in india, plans to be at the forefront in bringing newer products. Providing sustaintable transport solution to the table and continuing growth in all segments during the year 2016 and beyond. Kamal Bali, Managing Director, Volvo India speaks to Renu Malhotra
Managing Director, Volvo India
As we welcome year 2016, what are the new year resolutions of Volvo India?
As you may probably be aware, the Volvo Group’s vision is to deliver sustainable transport solutions. This has been our aspiration for long, and we shall continue to strengthen the value we create on this path. Almost all our solutions – be it from buses & trucks (CV), construction equipment (CE) or engines – offer more with less, with lesser fuel consumed, lower emissions, and greater productivity resulting in reduced number of equipment / vehicles used for the same job. At the same time, they bring with them much higher standards in safety. Supporting this very objective, we have now trained over 66,000 drivers and we conduct nationwide programs for drivers and operators – such as the ‘fuel watch’ competition and the ‘Operator Champion’ program.
In 2016, we will further strengthen this important focus. A good flag-bearer from the Volvo Group in this regard will be the first batch of Volvo Hybrid Buses which will be delivered to Navi Mumbai in 2016. Volvo Financial Services, which was launched in October 2015, will move to the next gear in the coming year, supporting all businesses to deliver complete solutions to customers. By now, it’s very common to see new concepts and product models from Volvo every year and you can be sure that the next year will continue to witness this spirit of renewal and innovation.
What was the performance of transport sector in your bracket in 2015 and what do you predict for 2016.
After three years of negative growth (2012 – 2014) in demand, the year 2015 saw a significant upturn and growth in most of our market segments of CV and CE, even though the high levels of 2011 may be surpassed only in 2016. The market growth ticked on the back of demand drivers from the mining & construction industry. Our road machinery, especially compaction, showed positive trend compared to the year gone with the road projects opening up. Somewhere in the middle of the year onwards there has been a slight upswing in our private bus market where we primarily sell luxury AC coaches. Overall, the year 2015 will close by and large with a 20% + growth in the industry segments that we operate in, which bodes well for the industry in 2016 and beyond. With the prospects of reasonable levels of economic buoyancy, we are fairly bullish on 2016.
Volvo emerged as strong brand. What are the responsible Factors?
Volvo is known for its safety standards, high-performing solutions, technology, people-focus, ability to drive progress and a seemingly understated approach to the market but backed by long-term commitments. Furthermore, whatever we do, we try to do it for the good of the society and the environment we operate in. That is why subjects like fuel efficiency, people safety, environmental performance, driver training stand tall in our ambitions and our strategic plans. These initiatives are at the centre of our focus, in our vision of being the world leaders in providing Sustainable Transportation. So, when we brought in products into India [1998 onwards], each of the products – even though generally priced higher than the typical products in India – promised to do more with less – lesser fuel, reduced emissions per passenger-km or tonne-km and offer better overall performance. We believe every stakeholder noticed the value that we were attempting to create. Many stakeholders who have been closely associated with the Volvo Group would consider Volvo as the key catalyst of change in the Indian CV landscape.
The high-performing tipper trucks, the luxury inter-city Coaches, the low floor city bus concept, the over-dimensional cargo (ODC) trucks built in India, articulated haulers : are all segments that did not exist and we dare say Volvo singlehandedly established them. Today, Volvo Tipper trucks facilitate 30% of coal mining operations.
Volvo Buses are in 34 cities. Volvo Construction Equipment is something that you would see in operation in every other infrastructure project, and Volvo Penta Engines probably fuel one out of three naval or border security patrol boats. When it comes to buses, not only has Volvo become the most popular brand defining the category of “safe and luxurious road transport experience”, it has also been the first to promote the public transport agenda – which today is acknowledged as the key to minimising intense congestion and the negative impact our cities are facing. As Gustavo Petro said “A developed country is not a place where the poor have cars. It’s where the rich use public transportation”. We believe that stakeholders in the industry understand this role we have played and it is heartening to see much of the industry trying to emulate the path we have taken.
In addition, our highly successful JV with Eicher Motors, namely VE Commercial Vehicles (VECV) has helped us occupy a much larger space and presence in the growing Indian CV market.
In conclusion, I would like to say that the two attributes that we stood by in our decade and a half journey in India have been ‘courage and our unflinching determination’ to change the circumstances that our industry typically operated in & our underlying belief in the need to progress. Today, when it comes to high-performing CV and CE applications, the Volvo Group probably has the richest local experience in India.
Who are your major competitors? What would your USP?
We are predominantly in the CV and CE industry segments and we operate alongside the known global & local names in the industry. However, I believe we fortunate to be positioned in those segments of economy, where India is changing, aiming for a bigger vision ahead for better life for its people. In such landscape – for all progressive players in the Industry – the main competition is not really with each other, but with our ability to collaborate with multiple stakeholders, be informed – so that we can together create a higher value and sustainable future with innovative solutions.
How do you propose to meet rising market demands? How would you rate the Indian market and Indian consumer?
Let me start by saying that the Indian customers are highly discerning as well as aspirational and they know their business
very well. The only limiting circumstances is that they may not have the necessary circumstances to apply the world’s best solutions. Consider trucking – we have huge challenges in India, with respect to logistics efficiency and infrastructure development levels – even when compared within Asia. This means that when the customers buy a high performing product, they will gain through quicker arrivals, safer transport – but because of end-point limitations, they have to keep their vehicles idle. And, this is where the transport efficiency and economics suffers.
One of the estimates indicates that the current logistics’ cost in India is almost 13% of the GDP versus the global average of 8%.
But as we go forward, in a regime of GST and one unified India market, and as things get more efficient, you willfind the same customers choosing and applying their solutions very differently. When some people say that customers in India are price conscious and therefore, modern technologies may not apply, I completely disagree. In fact, most customers understand what a value proposition is, when they see the one that brings greater value compared with their existing propositions. Therefore, you will see greater traction towards higher- performing vehicles and products into the future. Already where the circumstances are right our customers have clearly shown their level of aspirations. Consider the mining segments – we have customers who have built fleet sizes of 500 and more. Consider inter-city bus transport and we have state transport corporations with fleet size of 600+. Consider the growing pull for the higher tonnage (75 ton) crawler excavators in the mines ! At our end, we are of course doing multiple things. We have many a segments in India where we have set the standards and raising the bar with high-performing vehicles such as our Volvo Buses, Volvo Trucks, Volvo Construction Equipment, Volvo Penta Engines. We will continue to nurture this market attracting more, make sure that our products continue to deliver greater value to our customers.
At the other end, the Volvo Group has introduced many a brands in the emerging “value” segment. We have our UD brand in Buses, SDLG in Construction Equipment and, of course, the Eicher brand as part of our JV competing effectively in the mainstream CV market.
With these brands complementing each other, the Volvo Group is all set to play a bigger role in the growing India transport and infrastructure story.
Do you have any plans for diversification?
Volvo Group today already mirrors its global organisation with operations across buses, trucks, construction equipment, engines for marine & industrial applications and we recently introduced our financial services business. We operate with multiple brands today – Volvo, UD, Eicher, SDLG and Penta. In India, we also have close to 2,500 people supporting the Group level activities in product development, accounting and IT services. We have 3 factories in Bangalore besides the industrial establishment with our JV VECV.
As you may have seen year on year, we have been bringing new technologies, complementing brands, products and solutions, keeping customer needs at the core of all our actions. This approach will perpetuate and you will continue to see exciting times ahead as some of our ongoing initiatives gather greater traction and support.
I believe that “Make in India” program strikes at the root of India’s critical shortcoming and is, therefore, its success would be the key to the imperatives of accelerating economic activity, higher value-capture in India
What bottlenecks do you foresee in the coming future to rising businesses?
As an emerging economy with 1.2 billion people and diversity, we all understand and appreciate the huge opportunities and the multiple challenges our country faces. We have also seen the rolling out of several national themes and agendas that are promising to address most of the challenges and harness the emerging opportunities. As a nation which has big aspirations, we need to overcome many a challenges – accelerate infrastructure development, nurture skills and more jobs, make our cities liveable while they grow, adopt sustainable public transport practises, improve logistic efficiencies which includes many aspects including early roll out of the pending GST bill and one unified national market, and so on and so forth. We need to develop a clear path ahead for alternative fuels/ technology, for sustainable growth of automobile industry, with minimum impact on the environment.
So, having said that, these challenges are acknowledged by most stakeholders. Therefore, to my mind, the challenge ahead is to turn these plans into reality and get all key stakeholders to work together, accept a shared vision and work towards realising it.
Do you have any suggestion for growth of Transport sector?
In today’s circumstances, sustainable transportation matters a lot, more than ever before . Especially, when we aim to grow at 9-10%. We cannot sustain this growth, if we were to be impacted by the negative impacts of growth. The only way ahead is sustainable choices and inclusiveness. For this, all of us including the regulators and civil society needs to accept and chose the right options ahead voluntarily. And collaboratively. We need to make use of information systems, IT to optimise the industry, modern technology and we need to concentrate on skill development so we have the people who can support this growth gainfully – whether they be truck drivers or manufacturing specialist. In the long-run, this will have a positive, cascading effect in the growth and healthy development of the transport sector.
What is your present market share and where do you go from here?
As a group, we have a majority share in most high-performing segments where we operate, whether it is Volvo Trucks or Volvo Buses and we are No.1 or 2 typically in Volvo Construction Equipment segments. With Eicher, we are a very significant mainstream player in the CV industry, being the third largest player in CV industry in India. With the projected growth of the Indian market, we want to play an ever growing role in India’s progress, by continuing to be at the forefront of providing sustainable transport solutions – where everyone associated with us including drivers, customers, passengers – believe that they experience better quality of life and a better environment for them. Next year, we will introduce Volvo Hybrids – the first step in electro mobility path that we have chosen we hope to replicate our global success in India too. Globally, we have over 5,000 buses in operation in the hybrid & electric mobility category. So much so, as Volvo Group in Europe, we plan to produce only the Hybrids/Electric buses in the low-floor category in the comings years. With our various business propositions, we hope to be closely entwined with India’s progress in infrastructure development, urbanisation and skill development, backed by safer and environment friendly transport solutions.
How do you see the Make in India program?
I believe that “Make in India” program strikes at the root of India’s critical shortcoming and is, therefore, its success would be the key to the imperatives of accelerating economic activity, higher value-capture in India, creating competitiveness, more jobs, and inclusive and sustainable economic growth. It is a flag bearer, in conjunction with other schemes such as Digital India, Smart Cities, Swachh Bharat and Jan Dhan Yojana, which have the potential to rightfully complement the flagship program. The manufacturing sector has a key role to play in providing employment and as we go forward with increased urbanisation, it is the manufacturing sector which can throw up opportunities for many too. Of course, without doubt ‘Make in India’ has to happen in conjunction with big steps in the area of ‘skill development’ & focus on education – so that we have our young people in a position to gain from the growth ahead. Else, we may face a nightmarish situation where the need and demand exists, but we have a huge number of unemployed youth.
However, the success of “Make in India” lies in in our ability to attract investments into the country. This will happen when the investors start believing that there is a reasonable degree of ease in doing business in India, including the availability of the required physical and digital infrastructure. This Make in India program has to be driven together with initiatives in the areas of labour reforms, transparent and predictable taxation system, reduced red tape, inspections and filings, easily enforceable legal & regulatory framework, et al. Government policies are the key. The need is to be clear and long-termed , so that the investors can be reasonably confident with the investment they make. Let us consider alternative fuels & technology as an illustration since there is an immediate and urgent need to take this path. If we have a clear direction, more investors will find it easier to decide on investments in the area. Hence schemes such as FAME and Smart cities become important in supporting “Make in India”. With clear demand and growth in volumes will come focus on localisation.
At Volvo, not only we have built 3 factories in India over the last 2 decades, but we have a 1,000 people strong product development team that is responsible for the complete product development for “value product segments”. India is considered as home market for Volvo Group and we see this position getting stronger, with the success of Make in India and associated programs. When Brand India gets progressively more attractive, it can only help provide a fillip to our ongoing plans for export of vehicles & services across the globe.
Where do you see your company in 2016 and beyond?
In 2016, we will see Volvo bring its hybrid buses in India, besides the first full operational year for our Financial Services business, and serial production of some new truck models and road products from the CE segment, which have been recently launched. We will continue to bring in newer products and solutions to the table, as we have done in the previous years – across Volvo Trucks &Buses, Volvo Construction Equipment & Volvo Penta besides our other brands. As I said earlier, we are bullish about the continuing growth in all segments that we operate in India, during the year 2016 and beyond.