Commercial vehicle sales, which had started to recover from December-January, have been hit hard again by the second wave of the COVID-19 pandemic. Satyakam Arya, the MD and CEO of Daimler India Commercial Vehicles, is cautiously optimistic on the market; while he sees April-June quarter to be stressed, sales should start to revive from the next quarter on the back of demand from the infrastructure and logistics industry.
“In 2020, we actually hit a bottom as far as the CV industry is concerned. There were green shoots last quarter, but now, we are in the middle of the second wave, which is much more severe than the first one. So, the second quarter (April-June) is definitely going to be stressed, in the short-term. That is what we have seen April; May and June could be worse than April,” Arya told THE WEEK in an interaction.
India’s GDP growth has already been scaled down by economists from the earlier double-digit projection, as many states have imposed lockdown-like restrictions amid the second COVID wave. However, the government continues to spend on infrastructure and demand from segments like mining and last-mile logistics has remained strong. The expectation also is that post COVID, people will begin spending. That should aid in a recovery in demand for trucks and buses. However, scaling the levels seen in 2019 is still a long drive ahead.
“There are reasons to feel optimistic that there will be growth in the market. We are expecting the medium and heavy CV segment, which was around 106,000 units (in 2020), could be in the range of 160,000-180,000 by the end of this year. In 2019, we were closer to 250,000. Eventually, that level could be achieved in 2022,” said Arya.
DICV entered India in 2009 and has over 1.1 lakh Bharat Benz vehicles on road in the country. It has seen good traction in recent years. Its market share in 2020 touched 9.1 per cent, compared with 5.8 per cent a year earlier. Its domestic volumes fell 34 per cent in 2020 to 9,624 units, even as the wider industry contracted 60 per cent.
“The key to success in India is to achieve a high level of localisation. All the products that we have in India are more than 90 per cent localised. We plan to take this to even 95 per cent,” said Arya.
The company has scaled up its network in India to 250 touch points from 180 two years ago. Its plan is to further expand it to 350 touch points in two years. “We want to have a touch point at less than 100 km or under two hours for our customers across India.”
DICV’s plant in Oragadam near Chennai is the only such in the Daimler Truck World, where all the brands, including Bharat Benz (for India, Nepal and Bhutan), Mercedes Benz (exported to Indonesia), Mitsubishi Fuso (exported to over 50 markets) and Freightliner (to Mexico) are produced, according to Arya. Apart from vehicles, DICV also exports components and aggregates like transmissions.
The plant has a capacity to produce 70,000 trucks and 4,000 buses annually. The company has already announced an investment of Rs 2,300 crore in India over four-five years to ramp up production.