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Daimler leverages global strengths for BS-VI trucks

Murali Gopalan | Updated on February 20, 2020 Published on February 20, 2020

Satyakam Arya, MD & CEO of Daimler India Commercial Vehicles   -  Bijoy Ghosh

Company confident that it will take the pole position by offering top-class value proposition in India

Satyakam Arya breaks into a huge smile when the Bharat Stage-VI topic crops up during the conversation. While the automotive industry is bracing itself for a rough ride in this new emissions era scheduled to kick off in April, the MD & CEO of Daimler India Commercial Vehicles (DICV) is super confident about the road ahead.

“The difference between us and the others in the commercial vehicle business is that we did this eight years ago in Europe for the first time. We have not only matured the technology during this time but also optimised it,” says Arya. In short, this means that its performance has only gotten better since the time the team began working on this technology in India.

The other important point, continues Arya, is that right from BS-IV, the company, better known for its BharatBenz brand, has used the same SCR (selective catalytic reduction) technology which means there is a familiarity point with the buyer. “We took the technology, used India’s driving cycles in highways/cities/loading patterns and optimised it further to get the best value (for BS-VI),” he says.

The BS-VI trucks covered over 50 lakh kilometres across every nook and corner of the country . “We know how the truck is performing since it is based on solid data. When we speak of higher fuel efficiency or lower maintenance costs, this is actual data,” reiterates Arya. And even while the BS-VI technology was available, the India team still had to localise it to meet the costing challenge. This involved two years of intense work, which led to over 80 per cent local content being achieved and the balance to be wrapped up in the next few years.

Arya then elaborates on the significance of this exercise from the viewpoint of offering a greater value proposition to the BS-VI truck buyer. “In a new truck, only 10 per cent comes from the initial acquisition price with the balance 90 per cent being the running cost through its lifetime,” he explains.

While conceding that BS-VI “definitely has a substantial acquisition cost”, this is still 10 per cent of the overall cost. “Too much is spoken of this and we decided to focus on the balance 90 per cent,” continues Arya. The idea to ensure that the overall 100 per cent cost structure in the BS-VI truck was still lower than its BS-IV sibling.

“If you focus on 10 per cent, you will do a lot more to bring the overall 100 per cent down whereas you will do less if you focus on the 90 per cent component. Within this 90 per cent, 50 per cent is fuel cost and we have promised to deliver 10 per cent lower fuel consumption than BS-IV,” explains Arya.

The DICV team also worked relentlessly to ensure that it could offer 6 per cent lower maintenance costs than BS-IV. All this was part of the focus on the 90 per cent cost component, where the company is confident that its BS-VI trucks will give a faster breakeven than the BS-IV version.

“In a way, the customer is getting higher value at a slightly higher price. He will recover the difference faster. The intention is to tell people that despite a higher price what you will get is more productivity and efficiency,” says a visibly pleased Arya.

From his point of view, there are a lot of “exciting things happening”, which gives him the confidence that 2020 will be a period of strong growth for DICV despite the challenges. “We are poised to gain marketshare because of the value proposition and the headstart over competition,” adds Arya.

The company is also targeting “healthy growth” in exports even while some global markets are in a state of volatility. BS-VI also offers the attractive prospect of shipping out components to developed nations. “I see a chance for us entering new markets and also using India as a manufacturing hub for some businesses,” says the DICV chief.

Mexico plans to move to Euro 6 soon and there is no reason why its needs cannot be met by India. Brazil, which uses the same powertrain, is also moving to Euro 6 and if the costs of manufacturing in India are lower, consignments could be shipped out of here. This is equally true for the ASEAN region and a host of other countries.

Clearly, one of the biggest advantages for DICV is to be able to source technology from the Daimler world. As he says, why learn anew and reinvent the wheel when everything is accessible. This is equally true for the competencies built within the India team which can be supplied elsewhere.

“Within Daimler Trucks, India’s importance is not confined to the local market alone and the idea is to use the facility to do much more,” says Arya. The IT team, for instance, has the potential to do a whole lot of things globally for Daimler.

Top-class competencies and competitive costs are the strengths India brings to the table and there is no reason why some of these strengths cannot be scaled up and offered to Daimler operations elsewhere.

“For instance, the market is down now and what can we do to stay profitable and keep things going? It works both ways: they save costs and we are insulated from the domestic market,” says Arya. Scaling competencies also generates employment, brings revenue and is ultimately a win-win situation.

There are a host of new technologies being developed in India which can also be leveraged in the Daimler universe. “You get great engineers here who are hungry for knowledge — they have developed new apps at a tenth of the cost in Europe and at half the time,” he says.

Arya admits that the auto industry is facing new disruptions and challenges of an “absolutely high order” which means the entire ecosystem will have its work cut out. “You need people who are willing to learn new things; we will have to bring in new competencies from outside. Re-skilling will become top priority too,” he says. As part of this drive, DICV recently established a business analytics department with a handful of data scientists who are preparing a roadmap on what can be done with new data. “Data is the new battleground and they are educating us on what we can do. Based on the roadmap, we will see what lessons can be picked for the good of the organisation before deciding to scale it up,” says Arya.

Digitalisation is the other drive that needs new competencies and there is reverse mentoring happening at DICV. “Everyone talks about seniority mentoring but those days are now. My CIO who is 31 years old is my mentor and I have no qualms about it,” continues Arya.

The two have regular sessions where the DICV chief learns more about concepts like blockchain while imparting his own lessons on leadership. He insists that there should be no hierarchical hangups in modern organisations, where people should be open minded instead of being obsessed with seniority.

Innovation platform

DICV has also created an innovation platform, termed ‘the farm’, to institutionalise/harvest ideas. The first round of idea generation was done recently where teams brainstormed while the leadership team acted as facilitators. One team was selected from the pitch and earmarked funds to take the idea forward.

What is particularly interesting is that the brainstorming sessions lasted 20 hours at a stretch, which is an indication of how seriously everyone took the exercise. “We will scale this up now that the first idea has been accepted from within,” says Arya.

The company also intends to “get ideas from outside”, which will means getting more active on start-ups mushrooming across India. “I plan to get personally involved and will aggressively pursue this on ideas relevant to us. Mumbai, Bengaluru and Chennai are also good hunting grounds,” he says.

Arya is clearly raring to go in this new decade, which he hopes will give his company the edge over competition. “This will be a critical decade for DICV in technology and value for money where we are already No 1. With BS-VI, we have gained the lead and are poised for greater things,” he says.

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Published on February 20, 2020
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