Bangalore: "It is nice to learn the media describing other companies' vehicles as 'Volvo-like vehicles'," says Volvo India managing director Ulf Nordqvist. He has reason to be proud. Volvo India is now redefining the commercial vehicle manufacturing business in the country with its high-tonnage, air-conditioned driver cabin and simple-to-operate modern systems.
For Nordqvist, India is a familiar level-playing ground. As Volvo India's project director he was actively involved in setting up the eight-stage assembling plant at Hoskote near Bangalore. Later, as the company's board member, he chipped in substantial managerial inputs. "After looking at cars we decided we should go in for manufacturing trucks."
Nordqvist was also Volvo Truck's vice president (business development), looking after its European business. "One can see a perceptible change in the domestic trucking industry. People are now going in for higher capacity vehicles. Our growth percentage is a proof of that," say he.
In 1998 Volvo India's first truck left its factory premises. Some days back, it rolled out its 1,000th truck. Apart from the usual goods transport sector, the company is also in the earthmoving equipment industry with its 30-tonne, heavy-duty trucks, excavators and wheel-loaders - the last two are imported. The company's trucks have more or less replaced smaller machines at Singareni Collieries.
Volvo India has sold around 250 vehicles to coal mines. Apart from trucks, it also trades in diesel engines that find use in the marine industry and gensets. Launching its fully-built buses sometime back, the company is now redefining the bus segment with its low-height vehicles built on bus chassis, and not on truck chassis as done by others. Nordqvist talks about Volvo India's drive ahead. Excerpts:
Has the economic slowdown impacted Volvo India's performance?
It is true that the slowdown has had some impact on our sales, but it is not consequential. In a market that is going down, we are growing at an annual rate of 35 per cent. Our repeat purchase rate is around 65 per cent.
The high price is one deterrent factor when it comes to your trucks and buses. Are you adopting any focussed marketing strategy? Way should anyone buy your truck when he gets two normal trucks for the same price?
It's true that we don't target the mass market. We first find out the segments that can benefit by using our trucks. We then ask ourselves the question whether we can provide a cheaper transport solution to them. If the answer is yes then we start tackling that particular segment. For instance, we are focussing on cement, clinker and aluminium transporters.
It should be kept in mind that a high tonnage coupled with a high average speed result in high productivity. This is exactly what Volvo trucks offer you. Our trucks clock twice as many kilometres than typical trucks (around 1.6 lakh against around 80,000 with normal trucks). The easy-to-handle control system inside the air-conditioned cabin reduces driver fatigue and increases driver productivity. The cost-per-kilometre per tonne is far lower when comes to Volvo trucks. The future trend will be towards multi-axle and larger vehicles that are efficient and cheaper.
Have you taken any other measures to reduce or contain the prices like increased localisation of components?
Well, we are in the process of identifying components that could be sourced locally. Recently we decided to source rear-axles from an Indian company. The vendor development process is now on. We will sit with a potential component supplier and find out his capability and quality. Then samples will be sent to Sweden for testing and approval. Some of the major items that are now imported are engines, cabin shells and chassis. We are looking at India as a sourcing point for our global needs and have started sourcing forgings and castings from here.
But forgings and castings are sunset industries in the West due to their polluting nature…
That is the starting point and we will gradually expand our product basket. Vendor development is a time-consuming activity. Volvo IT [the IT arm of the group] has signed an agreement with Mindtree Consulting to outsource its IT needs. Though I can put any numbers on the total value of the contract, Volvo IT's volume of work will not be less than 150 man-years. Initially it will be onshore and a decision is to be taken on offshore contracts.
Apart from manufacturing trucks and buses, Volvo India is also into selling diesel engines and earthmoving equipments. Till date how many numbers did the company sell in these segments?
Till date, in India, we have sold 1,000 trucks, 2,500 Volvo Penta engines, 400 earthmoving equipments and seven buses. Though the earthmoving equipment market is on the downslide, we are selling a good number of trucks to coal-mining companies.
Volvo India's distribution network is somewhat unique. The company has just service points, but sells its vehicles directly. Why do you take a different route instead of from the conventional one of selling through dealers?
We are offering transport solutions; not just vehicles. Further, Volvo's products are much more complicated than others. That is why we offer onsite support at some places. Hence it has been decided to sell directly instead of through dealers. We also introduced the concept of annual maintenance contracts for trucks. We have 46 Volvo-owned support points across the country, but we sell our earthmoving equipments through five dealers.
Similarly, with respect to your buses, why do you sell wholly-built buses instead of chassis and allow the buyers to the build the body according to their own tastes?
It is true that we sell only wholly-built buses. We have an agreement with Azad's to build bus bodies as per our specifications. Again, it should be remembered that Volvo vehicles are a bit complicated - the bus body and chassis should synchronise. Even a slight mismatch will impact the vehicle's optimum performance. In order to ensure performance, we have decided to sell only fully-built buses. We are now targeting private bus operators to push our buses as they take decisions faster.