Automotive manufacturing, a cyclical industry, is closely linked to the company’s economy as well as the GDP. A 20 per cent drop in this industry in the last few years is now a matter of serious concern among all major vehicle manufacturers.
The Indian automotive industry with 12 leading players are equipped with widespread global experience and deep technological expertise. The installed capacity of the industry is almost three times the demand, which means that the manufacturer is virtually hunting for business. The need to maintain cost competitiveness for the end-customer is well recognised. Consequently, the industry focus would be to see how it can hold on to prices and offer products at an affordable prices to customers. Cost competitiveness in the industry is looked upon in two different ways. The most natural way is to look at how to reduce the cost for a given quality. Secondly, the product quality that makes it highly competitive.
Making these observations at the 14th NIQR National Convention on Quality & Reliability held in Chennai, Mr. B. Venkat Subramaniam, Executive Director – Corp. Strategy and Planning, Ashok Leyland Ltd., said that last year there was a sense of utmost urgency, almost a crisis in which his company could effect cost reduction of roughly Rs. 500 crores. The company tried to do without a diesel oxidation catalyst for engines by providing the same level of emissions the government demanded.
“We followed a lot of methods, by the end of which we saved Rs. 8,000 per vehicle which is very significant for us. This is an example of how one particular application does not need a particular feature. Also, certain processes were changed to obtain some additional savings. We also worked a lot along with suppliers to get rid of a few issues which helped save significantly. We have now gone a little further into our recon business. If the local engine is available at Rs. 45,000, we are offering AL recon engines at Rs. 65,000. We have done all plant-related improvements for reconditioning. Ashok Leyland used lean production and distribution systems and was able to save considerably in packing and freights”.
In fact, he said, consumers or fleet operators face a lot of problems due to the rise in diesel prices, driver-related issues, increasing toll charges, and so on. They expect low maintenance cost, reasonable resale value for the vehicle and skilled drivers who can operate the vehicle efficiently. These expectations vary with the type of load, the road on which they travel and the weather.
Addressing the spurious spares business, Mr. Venkat Subramaniam observed that as the vehicle gets ageing day by day, OEMs do not play any major part, but instead a lot of unorganised, spurious business comes to the fore.
Highlighting this issue, he said: “We at Ashok Leyland thought we should address that part of the business lifecycle of the customer. We have a specific pricing strategy. We created a new brand called Value Parts which is different from Leyparts. This is price positioned differently from Leyparts and from the OEs and is better than the non-OE unorganised segment”.
He further stated that the selection of suppliers is done with great care and that frequent quality checks are arranged to ensure the quality of spareparts.