SAE-SMB, part of Italy’s ADR Group, is a fast-growing brand in the Indian trailer axle market. Mr. Giulio Segneri, Director, ADR India, shares his views on the imminent BS-VI transition in India.
Excerpts:
Market impact
BS-VI vehicles will be more expensive. Diesel vehicles and economy-segment motorcycles will see a sharp increase in price which may keep buyers away for some time.
The Ministry of Petroleum and Natural Gas has told the Supreme Court that vehicles not complying with BS-VI standards won’t be allowed to ply on Indian roads. This has created a major confusion given that the Ministry of Road Transport and Highways had notified that auto makers would get three months to exhaust their stock of BS-IV vehicles after the new norms are enforced. The apex court has said that manufacturers won’t be allowed to register BS-IV compliant vehicles after March 31, 2020.
We at SAE-SMB are working closely with our local suppliers to address this situation; for some of our components that are imported from Europe, we are carefully planning the consignments according to our order books.
Cost implications
Implementation of BS-VI norms from April 2020 would raise the cost of heavy trucks to the tune of 10-12 per cent. Transporters are also expected to be cautious in accepting BS-VI trucks as they would have concerns over the vehicle’s fuel efficiency and maintenance cost. This is expected to lead to an advancement of truck purchases from FY21 into FY20.
Cost control measures
The BS-VI shift will bring in an advancement in truck engine technology as a result of which fleet owners will keep few vehicles and can follow the ‘hub & spoke’ model which is common in western countries. The fleet owner can have only a single tractor-head (engine) and use several trailers with it which reduces downtime and will reduce operational cost. This is one option to absorb the BS-VI price increase.
The other option for heavy-duty fleet owners is to use lightweight and high strength trailers to carry more load or materials and earn more profits on particular routes.
BS-VI technology comes with more electronic controlled systems through which accidents can be controlled with preventive maintenance. The service cost can also be pre-decided and optimized due to BS-VI engines where the life of components can be predicted for particular km running or running days of the vehicles.
Challenges
The first challenge would be to introduce the new technology in such a short span of time and train the existing dealers to service the new vehicles. The dealer networks have to be strengthened and equipped to handle the change. Secondly, as soon as the BS-VI vehicles are on-road, the OEMs will pitch to increase sales in order to recover their investments and turn profitable. Lastly, the consumer will look at lower operative costs in lieu of the high cost of the vehicles. All these challenges need to be addressed in the right way.
Opportunities
The top benefit is of course, less pollution in cities. Indian cities are currently choked up with air pollution and are among the most polluted in the world. So, the change to BS-VI will be very effective in India and China in comparison to the developed countries. Also, we look forward to the switch to electric vehicles in the next decade which will further reduce pollution in India. Another positive sign is the fact that the market is moving towards sustainable growth.
Outlook
FY19-20 has thus far been a really challenging year for the auto industry, more so for the CV sector. SAE SMB being a new player in the market, we are gradually working with our customers and are focusing on expanding our product range and meeting our customers’ expectations. We are working on different projects in the trailer segment and our other axles segment under the ADR brand, which stands for Agri and Industrial axles (low capacity or lower tonnage capacity); we are also involved in many potential projects, so for us, growth does not mean only quantity or volume but mainly customer satisfaction and the trust they have on the products and services offered by SAE-SMB. We are more focused on consolidation rather than growth.