(Note: the views expressed herein were shared personally by the spokesperson and do not necessarily reflect the views of the company)
Looking Back at FY21
Trucks: After extended lockdown, unlike other segments, demand for CV started in August 2020 and slowly picked up in Q3FY21. With the new normal, the demand for white goods through e-commerce saw a steep increase in LCVs followed by tippers used in the construction industry. The demand in January and February 2021 sustained for LCV and tippers and customers stated purchasing long haulage and tractor trailer trucks. It is expected Q4 of FY21 would be better than the same period of FY20.
Buses: No sign of improvement due to restricted travel and capacity utilization which is below 20% for intercity coach buses. However, some STUs have started releasing tenders for city bus requirement with EV and CNG application.
Takeaways and Positives from Challenging Year
Challenges and unexpected developments: Due to manpower shortage and fund constraints due to the lockdown, the supply chain cost has gone up significantly which led to fire-fighting to support customer requirement. From normal JIT, customers accommodated higher inventory across the supply chain including their warehouses.
Opportunities and Positives: We were able to rationalize suppliers who could support during the challenging times. The CFT approach to quick problem resolution and joint working by all functions to support customer requirement worked well. Digitization and virtual audit with approval across various functions including customer audits are put in place. There is improvement in business process by removing NVAs.
Thoughts on PLI Scheme, Scrappage Policy
Within the given framework, both PLI and Vehicle Scrappage Policy will boost the economy and demand for CV is expected to go up in FY22. PLI will force localization either by home-grown or multinational business houses and cascade to MSMEs and small scale units across the industry. Eventually, the economy of scale will help India-based units to improve efficiency and productivity and eventually increase their exports across the globe. The scrappage policy will help the customer to start new purchase of trucks in FY21. The challenge is how the scrapped vehicles will be handled by respective units or clusters for proper recycling and reuse of material.
FY22 Outlook
Steep increase in input cost (if continued) and fuel prices could impact the vehicle demand. EV push in city bus will force the industry to optimize products for this segment. Safety, improved mileage and comfort with connected solutions will drive CV growth – improved turnaround time and cost ownership.