‘India is a must-win market for MAN’

MAN Truck & Bus AG debuted in India nearly 50 years ago when it began supplying the legendary Shaktiman trucks to the Defence Ministry. Its next avatar was to join hands with Force Motors in 2006 before going solo five years later. Part of the Volkswagen group, MAN is now gearing up for its next growth phase here, says Joachim Drees, Global Chief Executive Officer.

What is MAN’s growth strategy for India?

We have decided that India is a must-win market for us where we need to increase share and volumes. India and China are the two main markets for us in Asia. We want to realign operations here as a business unit that would then be responsible for its growth. India’s economic growth gives us an opportunity and we are very well positioned to make the most of it.

With Bharat Stage IV emission norms due in April, we will enter with upgraded engines and further improve our product offerings when BS VI norms debut in 2020. We intend to reinforce our strong customer base in the mining sector which is our strength by enhancing dealer network. We also plan to go into the tractor segment. With air-conditioning in all trucks to be made mandatory shortly, this will potentially mean a bigger market in the future.

Does MAN do 100 per cent body building in India or give it to a third party?

We offer completely built tippers from our facility at Pithampur, Madhya Pradesh. We do not want to go into more detailed body building because this is a local business that is dependent on demand. Truck tractor, chassis and completely built trucks come from our production unit.

For the balance, we have body builders to offer the best solution. This is also part of the dealer business since it is close to the customer. In the truck business, the customer has a specific requirement and you cannot offer standalone products from the factory.

Will MAN contemplate smaller trucks here when the BS IV regime kicks off in April 2017?

We plan to stay in the 16-tonne and above segment though the Group plans to launch smaller and lighter commercial vehicles globally. We will decide whether this makes business sense for India. As of now, our focus will be on the 16-49 tonne segment up to 2020.

Isn’t it better to advance the timing of launching smaller trucks here?

The light commercial vehicle market is tough work and we have to ensure that we are more cost-competitive than the heavy duty space. In my opinion, it will not be easy to achieve this with a product based on European technology. I think the change of regulation with greater emphasis on safety and cleaner emissions will help us but we still have to consider the cost position and decide whether we can be competitive with these trucks in this market.

The heavy duty segment is our core expertise and main business. Light trucks come from bottom-up and are in a more competitive space that needs a huge network focused in rural and semi–urban areas.

Do you believe your bigger rivals are local Indian brands or other MNCs with operations here?

We are not looking at a specific competitor and know we need to offer something better not only in terms of hardware but also in after-sales services, fuel economy and total cost of ownership.

What kind of new technology are you using in your trucks both here and globally in terms of navigation, GPS or fuel saving mechanisms?

We have to extend our business beyond just selling trucks. Telematics and digitisation are our main schemes. We founded a new entity called MAN Digital Solutions in which we have invested hugely and have now more than 100 people creating the new cloud-based platform called RIO. Here, you can upload data on fuel, driving, location, cool trailers and tyre temperatures. We can combine all this data and tell customers how to optimise operations. Digitisation will change the face of the transport ecosystem and we will be selling more solutions than hardware.

How has MAN planned its India plant expansion schedule?

We need to upgrade the plant for BS IV and VI as engines will change. The engine is completely localised and will be redesigned by 2019. The plant upgrade will also allow us to extend our product offering like a 50-tonne tipper. We want to use the capacity of this plant to export engines.

Which countries would this involve?

We mainly export completely built trucks to West Asia, SAARC nations, Indonesia, the Philippines, South Africa and Uzbekistan. This year, we exported 1,600 units and want to grow this business. Once we start manufacturing BS IV trucks, these will go to similar markets while India could end up being a production base for BS VI going forward.

Is there room for expansion?

We have enough capacity. The challenge is to get volumes up and create a broader range of products in the 16-tonne and above market, both here and for exports. We also want to look at the potential of exporting the DOA (design organisation approval) engine to other assembly plants.

How is India different from China in trucks?

The Chinese truck market is more developed because local consumption is higher and growth in trucks is, therefore, faster. China is moving towards a European market model and we believe that India will follow suit in the near future. This explains why this country is important to us at MAN.

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