What role will VECV play for Volvo globally?
The market share almost doubled for VECV in the last five years and the current profitability is at its benchmark level today. The ecosystem has been put in place in the last five years -- the plans, the new product lines, the different approach on sales and after sales and so on. With that, the value will be created by taking Eicher more aggressively overseas because in this new range we have built in specific export variants which has not been the case before. Earlier, all the trucks were made for India and a few were sold in markets like Bhutan, Sri Lanka etc. But now we have completely dedicated variants for other markets, that will drive exports.
So, value is being created for the Eicher brand in India and globally. For example, the medium duty base engines manufactured from Pithampur are going into other brands of the Volvo group, even at Euro 6 emission level in Europe for the medium duty trucks.
The focus will continue to be in the domestic market but the relative focus on how we are gearing up for the Eicher brand globally is strengthening.
Which are the markets suitable for India-made products?
It will be the countries that have similar market context. So it won’t be markets like Japan, United States or Germany but it will be more of Africa, West Asia, South Asia and South East Asia. So these will be more of the evolving markets of the world.
What makes you not introduce other brands of Volvo trucks – Renault or UD trucks?
India is a special market where you have very few manufacturers that take the big share of the market - the duopoly. There is no other market in the world where you have two manufacturers taking 90% of a share. India also has the lowest price point lowest specification level compared to any major markets of the world.
India, China and Japan are examples of the biggest markets in Asia. In China 90% of all heavy duty (HD) trucks sold in 2012 were Chinese branded, in Japan 99% of all Japanese HD trucks sold were Japanese and in India 99.5% of all HD trucks sold last year were Indian. So do I want to bring in other brands for the remaining 0.5%? For this we already have Volvo trucks for the last 15 years and we have two-thirds of that 0.5%.We will see if we can bring any other brand of Volvo trucks to India.
How do you see the success of VECV joint venture for Volvo as a group?
All I can say is that the VECV JV has exceeded our expectations, we are extremely satisfied and it is considered as one of the benchmarks internally in the Volvo group in terms of how to run a JV together with partners.
Do you see any kind of synergies happening once the Chinese JV comes into picture?
In the strategic alliance that Volvo group agreed in the January with Donfeng Motor is still pending governmental approvals. My current focus is to make sure that this process goes through in a smooth manner and that we prepare for the alliance to come through. That remains to be seen whether we try to bring in some relation with our Indian JV.
How do India operations contribute for Volvo internationally?
VECV is also transferring very interesting things to Volvo, the Jugaad, Frugality and all of that. Already the medium duty base engine hub is here. In addition, we have all the major Volvo businesses here in India. In addition, we have purchasing teams sourcing from India for our global needs. We have hundreds of engineers that are working with Volvo global system. So we are in India big time.
Do you think VECV will be able to break the duopoly?
I can say that the duopoly is not sustainable, particularly when we have major players like the Volvo group and certain other major players coming to India. It’s just a matter of time and Eicher is the leading contender. We are driving modernisation and see no other players coming up.