‘There is strong momentum now in India’

Martin Lundstedt, CEO of Scania, was in India three weeks ago to inaugurate the company’s new bus manufacturing plant near Bengaluru. Earlier this week, came the news that he would be moving to head operations at fellow Swedish truck maker, Volvo. Lundstedt, who has been associated with Scania for over two decades and widely respected in the global commercial vehicle industry, spoke to Auto Focus during his India visit. Excerpts from the interview:

How important is India to Scania?

We have already articulated in our 2020 strategy that we should be at a sales level in India of 5,000 trucks and 2,500 buses/coaches annually. This will make India one of the most significant markets for Scania and among the top five going forward.

We are not mass but premium and what is more important to us is that we are growing with the customer base and the segments that are relevant. The numbers could grow faster depending on market maturity but that does not mean we are looking at volumes alone but are keen on providing the best mobility solutions. We are in India to sell vehicles but think we can make a contribution with our partners to create sustainable transport systems. The facility we have now in Bengaluru will be part of the Scania global production system for exports also.

Could you elaborate on these mobility solutions?

What we have seen in the last couple of years is a growing interest in discussing transport solutions with politicians and authorities both at the national and regional levels. Transport is extremely critical to drive other parts of the economy and society and it is good to see that India is open to having these discussions.

If you take a parallel with the rapid growth of mobile communications in India, we can replicate the same for transport as well. For instance, Bharat Stage 5 has our ethanol solutions and Bharat Stage 6 is coming in with our biogas solutions. These will be good opportunities for Scania.

Will India play a larger global role for Scania?

Our facility in Bengaluru will be the hub for a host of countries and I would think that Africa, the Middle East and ASEAN would be critical to us from India. Nearly 97 per cent of our sales are already beyond Sweden and Bengaluru is our first major Asian investment as a full hub.

We already have 100 engineers working for us in R&D, another 100 skilled IT engineers, and yet 100 others working in back-office operations. We are expanding opportunities along with the supplier ecosystem. When it comes to developing customer solutions, we can use these in other parts of the world too.

As Scania spreads its global footprint, will it face the challenge of country-specific solutions for regions like India?

This could be likely but, at the same time, I also see this as an opportunity. We are working to achieve the right levels of localisation and are with suppliers to create a proper ecosystem. We are bringing in people with good competencies and, in the long run, learning a lot in making positive use of the skills available here in engineering and IT.

Sure, there are a number of questions we need to address for truck specifications but we are in close talks with the Government to develop the right solutions for safety, sustainability and comfort in different types of conditions.

We feel there is a strong momentum happening in India and the GST (Goods and Services Tax) is an important initiative both for our operations in India and exports. We are seeing a number of very important steps for India which will help it participate actively in the global economy.

Moving on, do you think Scania’s successful modular product system for components can include India?

We believe there is tremendous potential and opportunity to bring different suppliers step-by-step into the modular product system. It is important to have the right levels of localisation. We do not have a specific range for India yet but can use the global system.

On competencies, you should be honest to call a spade a spade and I admit there are big (quality) variations among ancillary suppliers in India. Some of course are top notch and globally qualified at the Tier 1 level. The Tier 2 category is slowly climbing the ladder with some help. In the long run, if we want to have an ecosystem of suppliers, we need to ensure that we have a value chain that is working with the principles that Scania stands for.

What kind of synergies do you see happening with MAN Trucks which, like Scania, is part of the Volkswagen family?

When it comes to the commercial part of different brands, each has its own DNA within Volkswagen and is responsible for its goals. There are many opportunities for collaborative work in R&D and in similar components and this will start by defining what components in the global modular system you can assume to have in order to get better. There are already a number of similar components we source from big suppliers and any initiative will not be India-specific as an exercise but part of the global strategy. Eventually, we must ensure that this will bring value to our customers.

How do you see Scania making the most of the talent available in India?

India clearly has a strong base of local talent and the added advantage of English as an international language is already in place. Going forward, our colleagues in the Scania family in India will have an important role to play in the whole system. We have very strong belief in training and there is a saying in Scania which goes: ‘We hire for attitude and train for skills’!

COMMENT NOW