Lucas Indian Service (LIS) is a name that thousands of customers, retailers, distributors, garages and workshops across the country place their faith on. Being an aftermarket specialist, the company’s preparedness for and outlook on BS-VI is something the industry would keenly look forward to. Mr. S. Muralidharan, President, Lucas Indian Service, spoke to us on the BS-VI challenge-cum-opportunity ahead.
Excerpts:
Market impact
The shift to BS-VI is necessary from a point of view of the environment. The transition from BS-IV to BS-VI is a quantum leap and will have a number of consequences. First, at the OEM level, the powertrain and the accessories around it will be affected. Naturally, the service sector and the parts will also be affected. The level of diagnostics involved in the product is significantly more. There will be more ‘electronics’ in the car/truck, so it is imperative that the mechanics will need to equip themselves with the latest diagnostic software and tools. I’m not too sure how many Indian garages will have the competence or ability to acquire the latest diagnostics software. I’m also not sure how many OEMs would willingly part with such a software down to the independent garages. This means the inflow of vehicles into the independent garages is likely to significantly reduce as customers would prefer going to the authorized service stations. On the truck side, we can envisage a situation where technicians & mechanics will go directly to the larger fleet operators to offer them diagnostics at their doorstep.
Another change we expect is for the market to move away from pure repair more towards to remanufacturing and reconditioned products.
We are going to have several new products – new filters for Exhaust Gas Recirculation (EGR), Diesel Exhaust Fluid (DEF) like AdBlue and lots more. This opens up the need for a wider range of parts to be stocked by the retailers and distributors who are already struggling with an ever-expanding range of products.
We are going to be in a situation where over three generation of vehicles – BS-II & BS-III, relatively new BS-IV and the very new BS-VI – will be running on roads; this will be a challenge for both retailers and mechanics which would demand a knowledge upskill. We at LIS are upgrading our capabilities and already have one workshop ready which is capable of servicing all these vehicles.
Cost implications
The initial vehicle cost is definitely going to increase; fleet operators need to try and offset the same by improving their productivity. BS-VI vehicles will be more reliable which means they will have lesser downtime and better turnaround times, so the total cost of ownership will come down which is good for the industry.
Challenges
Apart from the challenges I had mentioned earlier in terms of product changes, more electronics, wider range of products, multiple generation of vehicles and so on, we see digitization as a major disruptor. As a result of digitization, everybody knows everything about your products in terms of price and features. We also have a much more educated customer who is demanding more and is not going to accept anything less. We also have more and more features getting added to vehicles. All these will be interesting challenges the industry will have to tackle.
Opportunities
At the society level, we are giving back cleaner air, nothing can be better.
From an aftermarket perspective, it will be very difficult for spurious manufacturers to make BS-VI products. The initial acquisition or repair cost might be higher, but the lifetime cost will be much lower because local spurious makers will find it extremely difficult to enter the market.
Also, the likely reliability of the product will be significantly more. Some might say this could result in aftermarket demand going down, but the overall vehicle parc is continuously growing so the aftermarket demand will definitely continue to be strong.
Outlook
FY19-20 has been a challenging year. Will the situation improve immediately? Of course not, because we are going for a major transformation of the industry and such a slowdown is natural. We are in a concerning situation but not in a panic situation.
At LIS, we are keeping our head above water thanks to our geographic reach and product range. We will definitely show a growing trend in our business.
We do expect some pre-buy towards the end of this year but it is purely a question of what the pricing of the BS-VI vehicles would be which is not yet known. On the spare parts and aftermarket side, the demand will not be affected.