Despite the current slowdown in the automotive industry, Auto Expo 2020 will once again line up the best of the Indian automotive industry, showcasing new vehicles and technologies, especially e-mobility. Taking this into account, Rajesh Khanna, Chief Executive Officer, RACE Innovations (P) Ltd., takes stock of the current status in the industry with an eye on what the future has in store
The automotive world is expected to meet at Auto Expo 2020, the 15th edition of its kind in this series. Planned to be held from February 7-12 at Greater Noida, it is organised by the Confederation of Indian Industry (CII), Society of Indian Automobile Manufactures (SIAM), and the Automotive Component Manufacturers Association of India (ACMA). The expo will bring to the front-end comprehensive innovations from various truck and bus OEMs, component manufacturers, application builders and coach builders. More than ever, the nucleus of the show is likely to witness products emphasising e-mobility, cleaner vehicles, alternate fuel-supported products, energy efficiency, safety, and weight reduction techniques.
This season of the expo is being held during difficult times of the Indian economy though of course there is optimism about future revival on account of possible reforms, new budget allocations for infrastructure spends, and other development projects by the government that will boost the automotive sector. Some of the reforms that the industry is looking forward to include scrappage policy implementation, electric vehicles deployment with infrastructure implementation programs under FAME II subsidy scheme, systems to curb monitor vehicle loading in excess of its capacity, new budget of Rs. 102 crores allotted for infrastructure development under recent announcements, and anticipated GST reduction across automotive products.
There is also the issue of commercialisation of private mining companies produce through amendments in the mining and minerals development and regulations, allowing private mining companies to sell their produce in the open markets as well as tax rollback on loans availed for purchase of e-vehicles. Supporting the governmental policies on clean, green India, commercial vehicle manufacturers been beleaguered in perfecting their electric vehicle development technologies and the focus has been on electric buses, hybrid light or small commercial vehicles, and electric trucks for specific short-haul repetitive operations, as for example, shunting operations in mines.
With the upswing in e-mobility drive on the anvil, there will be a change in terms of requirement, stipulation, and business expenses at the customer end due to shift towards the operational expenses (opex) model from the traditional capital expenses (capex) model. However, there have been concerns about the traditional OEMs’ willingness to adapt to this new operational expense model. It has been witnessed that new entrants offering customers total packaged solutions have been able to gain quicker momentum in capturing market share from the traditional home-grown players.
Market scenario
The overall CV volumes between FY 2018-19 recorded sales of 10,07,329 buses, trucks and tractor-trailers, further estimated to dip by 22-23% for FY 2019-20 with estimated sale of 7,77,056 units. The bus and coach markets will remain unaltered while medium and heavy-duty trucks and tractor-trailer sales are expected to drop by 25-30% against the FY 2018-19 sale numbers, whereas light duty trucks may expect 12-15% drop against the FY 2018-19 sale numbers. Excess inventory, GST woes, enhanced axle loads, improved logistics efficiency and productivity, and expected BS VI implementation in April 2020 have triggered delay in purchase decisions in the complete retail chain along with slowing down of the country’s overall economy. This explains the decrease in vehicle sales. Meanwhile, the entire logistics business is experiencing transformation in its operations and supply chain management.
More structural reforms are underway, and provided they are executed properly in a stable economic environment with digital technology, we expect the market to regain the growth path. The market forecast points to an increase in the sale of light and intermediate commercial vehicles, with demand for high-tonnage trucks rising in FY 2021 after exhausting the current excess inventories. RACE analysis reports a CAGR of 6-7% estimated over a period of FY 2020-21 to FY 2024-25. Manufacturers currently are exporting 9-10% of the total commercial vehicle sale, expecting to reach 20-25% of the total commercial vehicles produced by 2021-22. The truck production cycle is set to increase in the coming years owing to industries overseas seeking ‘budget trucks’ with compliance and standards not compromised.
Technology: Options and trends
Over the past two years, the transportation industry has witnessed stiff competition in securing the shrinking potentials in the market place. Goods movement witnessed modest improvements in 2019 owing to improvement in the manufacturing sector. Moving forward, we expect to witness a spurt in growth in the commercial vehicle sector through the establishment of superior standards at par with international markets. Passenger movement had improved but more focus was shown towards alternate economical models. However, with the new concerns on environmental pollutions and fresh initiatives on mass transportation, we may expect mass movements in buses with additional focus on electric-driven and hybrid vehicles.
There is a clear gap in OEMs not focussing on alternative fuel, hybrid-powered vehicles and retrofits on existing vehicles which, in our opinion, would be the much-needed technology for a price-sensitive market like India. Also lack of government focus, strong policies and subsidies to promote alternative fuels or hybrids contribute to why OEMs are not thinking on these lines. The hasty announcement made on 100% electrification by 2030, which has been scaled down to 30%, may further be lowered to 14-15%, which will be the reality as per our estimates considering all parameters based on RACE analysis. Further, we estimate the ecosystems developed to support the electrification drive will be channelized to hybrid vehicles’ programs.
Digital technologies and connectivity within vehicles and their control station will play a crucial role in fleet management, optimising and monitoring activities. It implies that vehicles would be required to be equipped with high-speed connections via e-SIMs. Further, more processing of collected data to improve efficiencies is going to be the next topic of development. We may see an increasing enhancement of the recently introduced AIS 140 (Intelligent Transport System) in the commercial vehicle sphere. Some upcoming developments in OEM technology can be noticed in the areas of transmission (automated-manual), brakes (auxiliary braking systems), higher HP engines with electronic diesel control system (EDC), suspension systems moving from mechanical to pneumatic, electric or hybrid vehicles, and engines to suit alternative fuels.
Further, exploring alternate fuel such as ethanol, bio-diesel, biogas, and natural gases such as CNG or LNG will help reduce dependency on conventional fossil fuels. With these means, the OEMs require adequate infrastructure planning for technology and after-sales support. The cyclical commercial vehicle market looks prospective in terms of possible restoration of vehicle profitability margins, driver safety with instant alerts, and notifications for surveillance. The challenge here, however, is actual compliance to new rules and regulations to allow innovation direct the course of the Indian commercial vehicle industry.
Top trends in CV industry
These are some of the top trends that we may witness in the coming months:
- Agility and innovations
- Connectivity and data
- Vehicles run by alternative fuels, hybrids and cleaner fuel
- Drive for e-mobility
- Self-driving vehicles gaining popularity in repetitive operations in short-haul areas like mining or port applications
- Emerging technologies to integrate vehicle monitoring and tracking systems on to a common platform
- Better customer experience in vehicles
- Shorter model cycle and operational expense models
- Predictive maintenance
- Innovative vehicle buying experience
- Usage-based toll and insurance.
Technologies for the future
Alternate fuel systems like CNG, biogas, hybrid, ethanol • Electric vehicles and EV retrofits • Higher horse power engines with electronic diesel-controlled system • Auxiliary braking system like electromagnetic retarders, hydraulic retarders and intarder in automatic transmission • Speed monitoring and control systems • Vehicle payload monitoring systems • eSIM-enabled vehicles, GPRS and GPS-related technologies • Vehicle alarming system to detect irregular driving patterns • Engines complying with BS VI emission norms • Infotainment systems, IT-enabled navigation, vehicle tracking, vehicle productivity analysis • Advance transmissions with electronic integrations such as automated manual transmission, automatic transmission, and other new technologies • Electronic braking system (EBS) • Electronic stability program and control (ESP) • Collision avoiding warning system • Lane shift warnings • Air suspensions in buses and trucks • Air-conditioner systems in cabins of buses and trucks