BS-VI Transition Experience
DICV unveiled the BS-VI trucks and buses range last year in January and the transition has been smooth for us. The market has absorbed the price well and many customers understood the technological advantage brought by BharatBenz trucks. Our teams did a great job as we had nil inventory of BS-IV in the entire value chain. Our dealers were also in a healthy situation to start selling BS-VI trucks. Two things helped: Firstly, customers viewed BharatBenz as a tech-savvy company and their trust in our products was strong. Secondly, though time was short for transition, we said we would not only upgrade to new emissions but also increase fuel efficiency and reliability and reduce maintenance cost. The entire BS-VI package as a whole has struck a good chord with the buyers. We have a very good ramp-up ongoing, and we believe this momentum will only sustain and get better as we move along.
Vehicles Sold
Since BS-VI sales started in April 2020, we have been truly overwhelmed with the response we have received. The value offered by BS-VI products is validated by increasing customer confidence, enabling us to outpace the market and grow by over 3.3% in domestic market share in 2021. DICV recorded over 9,600 unit sales, which is a drop of only 34% in an industry that recorded a market contraction of 60%. This is thanks to our Made for India brand BharatBenz doing extremely well.
Challenges
For us the transition to BS-VI has been quite smooth and we will lead this transition just as we did in BS-IV. We also utilized our know-how and experience from our global platforms for BS-VI which gives us an added advantage and takes us ahead of the curve. We will further challenge our own leadership position in fuel efficiency and total cost of ownership with our BS-VI trucks towards a new benchmark. We have been closely working with our suppliers to be able to maintain the timelines, ensuring cost competitiveness for BharatBenz and allowing for extensive testing to deliver the best total cost of ownership for our customers.
Opportunities
BS-VI along with the pandemic accelerated the digital transformation in the CV industry. Our products received tremendous customer support. It’s no secret that the new portfolio has helped us capture a much larger share of market. This is because overall the BharatBenz ‘Profit Technology+’, package ensuring industry-leading fuel efficiency, safety, comfort and reliability and connectivity has worked very well with the customer. Our target was clear to increase the value equation for the customer with BharatBenz. The long-term fundamentals of the economy are strong especially in medium and heavy commercial vehicles. Going forward, trucks will have more electronic components and this will open the door for futuristic technologies. This in turn will increase the vendor base for newer components and there is room for capitalizing these opportunities.
Current and Upcoming Financial Year
Despite the global pandemic and economic downturn, DICV was able to outperform the Indian CV market and emerge from 2020 with significant increases in both domestic sales (up 46%) and incoming orders (up nearly 150%) for Q4.2020 was filled with strategic announcements that helped us shape our business and operations better and more effectively. For the year 2021, our new CV portfolio is focused on providing solutions to address challenges posed by the ongoing pandemic, thereby enabling them to excel in their businesses and benefit society.
With the new generation of BharatBenz CV’s, we are looking to move away from the traditional tonnage classification. Instead, we will focus on creating ‘the best truck for every need’, customizing vehicles for use applications, and targeting specific sectors. This is to improve to serve our customers even better. For example, a vaccine truck’s needs are very different from that of an oil tanker. Giving them a BharatBenz Truck, with best-in-class fuel efficiency, safety and comfort, reliability, maintenance cost and connectivity allows our customers to fully focus on their business.
It is important to note that the demand for commercial vehicles is directly dependent on the economy. Higher activity in construction, real estate, infrastructure, mining, and other sectors that generate payload boosts demand for CVs. The Indian government is actively investing in infrastructure-related projects which has bettered demand for heavy-duty trucks from the construction segment. With the announcement of infrastructure for roadways, we see even more demand for BharatBenz products in the construction tipper segment where we already enjoy a growing customer base.