MAN Trucks India Private Limited, the wholly- owned subsidiary of MAN Truck & Bus AG, Germany, has been operating in the country for the last 12 years, in the first six years through a joint venture with Force Motors and then independently. The company has its headquarters in Pune. The state-of-the-art manufacturing facility at Pithampur, Madhya Pradesh, makes everything for the truck with an average localisation of about 82 percent. It makes tippers for off-road and construction, haulage for regular and over dimensional cargo, and special application trucks such as fire tenders, garbage compactors, concrete mixers, boom pumps, tip trailers and bulkers. The product range for India is developed at the MAN Trucks R&D centre in Pune. The trucks made in India are also exported to African and other Asian markets. So far the company has made more than 25,000 vehicles, and about 40 percent of them was exported. Joerg Mommertz, CMD, MAN Trucks India, told T Murrali of AutoParts Asia that “uptime is a high focus in our business approach. We are very customer-focused and oriented; this mind-set is very important in a country like India where, we believe, customers are getting more professional and demanding with high expectations from the manufacturers. We have set ourselves a target to contribute 10 percent to our total global volumes, in the next four years.” Edited Excerpts:
Q: Can you describe the current scenario in the Indian CV industry from the MAN point of view?
A: From our point of view India is one of the most dynamic, volatile and promising truck markets around the globe. We believe in sustainable market development in the coming years as the economic and legal environment here is undergoing positive change with BS- IV, BS-VI and GST coming in. All this will help enhance and improve infrastructure in the Indian truck market. India is an emergent market and we are keen to expand our market share here.
Q: How has been the journey of MAN Trucks so far?
A: We started in 2006 with a JV with Force Motors but in 2012 decided to separate. Now we are fully focused on setting up India as a hub, to cater to domestic market as also for exports to other emerging markets abroad.
Q: MAN was with a partner here for six years and now you have been by yourselves for an equal amount of time. So now it is time to ask you – what is the difference?
A: I don’t want to comment on the JV; it had its own advantages and disadvantages – but now we are totally dedicated to truck manufacture here; that is the difference. We are much more customer- focused and oriented; this mind-set is very important in a country like India as we believe customers here are getting more professional and demanding with high expectations from manufacturers. Meeting all these and adapting to local situations is part of our core competence as a European truck maker.
Q: What is in store for the next five years?
A: We don’t have any intention now to increase capacity as we have to utilise fully the existing capacity. Gaining market share, increasing volumes, expanding portfolio both in products and services, extending the dealer network and getting closer to customers are our priority areas.
Q: India is a different market from the point of view of emission regulations; we are leapfrogging from BS-IV to BS-VI with new technologies coming in. European OEMs are finding it difficult to catch up with this situation. How do you view this and how are you going to address it?
A: Development and technology must bring benefits to the customer, otherwise he will not pay. The market and legal environment must attract him, give him additional profit and make his business easier. This is the challenge to ensure that the business environment here is built up to accept technologies from the European market. Of course we have to make it all cost competitive, so localisation will be a primary concern. We are looking at partnerships with our vendors; we have to do it together. You can’t make a truck alone – you need a strong supplier base. We also have to look into after-sales, service, cost of optimisation, maintenance contracts, and total cost of ownership i.e. rupee/km. We make our product keeping in mind our social responsibility to society; we will make eco-and- environment-friendly products taking into account safety and ecological aspects so as to bring maximum benefits to the customer and comfort to the driver.
Q: The supply chain is the key; emission standards are another challenge. There is a lot of churn in the Indian CV industry with new technologies coming in; unless it makes sense to the end-user it will not be accepted. So where do you see the sweet spot for MAN in this scenario?
A: First and foremost from the customer point of view is fuel economy. Our BS-IV engines with 250/300 HP are known for their fuel economy, giving the customer immediate benefit on his investment. There are also other elements like suspended seats, air-conditioning, ergonomically designed cabins that all contribute to driver comfort. In addition, we want to optimise the gear box but have to balance it with cost to customer, so it will take some time. Also, reduce vehicle weight by, for example, using a banjo suspension, to increase the payload.
Q: The single piston air disc brake is lighter. What’s your thought?
A: Air disc brakes will ultimately come to the Indian market but customers here are a bit conservative so it might take some time to replace the drum brake. Customers perceive the drum brake to be less costly with low maintenance though that’s not really true. I personally prefer air suspensions, even on a truck. It can be easily done but you must first get customers to go for it, they must be convinced.
Q: I agree with you, however, unless you bring in some radical change to convince the customer, it will be difficult for an MNC to operate in a country like India. In which case what radical steps will you take to convince the customer?
A: Radical is a strong word, it reminds me of revolution. I prefer evolution because it takes time to convince the customer and show him the possible advantages. From the technical point of view we can always produce something different but at the end of the day it has to be sold. I personally don’t believe in disruption of today’s business, as is done in the IT sector where disruption is the norm. A steady evolution, pointing out to the customer the benefits he can get from a permanent, sustainable process that would not only optimise his products but also help in its future development is what is required.
Q: So uptime will be your key parameter, the USP for selling your product?
A: Yes, that’s what counts for all customers.
Q: When you want to increase the uptime, you need to have certain implements like sub-assemblies and consumables to match your intent. Since volumes are less for you, there will always be resistance from vendors to support you, and you cannot import as it will increase cost. So you are actually pulled apart in different directions; how do you manage?
A: It’s the chicken and egg concept. Of course we need volumes to hold the vendors’ interest; but being part of the Volkswagen group certainly helps in our interaction with them. We have to localise otherwise we will never be competitive. Lubricants, filters, fuel quality, are some of the elements which we are trying to improve step-by-step so as to optimise total cost of ownership and give the customer a longer life-span for his truck. The feedback from customers has been quite positive on the reliability of our truck.
Q: Would MAN India look at sourcing components from locally developed vendors for its global operations?
A: Yes, it is already happening. We are intensifying our activities here as we see more potential for this. We had a suppliers’ conference in Pune and that was quite positive; India is definitely a source for our global sourcing activities. We have a dedicated purchase team here in Pune to take care of it on behalf of our headquarters in Munich. The other element is export of complete trucks using local parts.
Q: How much of components have you already exported?
A: I can’t give you a figure for components; all I can say is that there is room for improvement. It depends on the quality of the vendors and better logistics that can be made available. ‘Just in time’ is a challenge and industry has to get used to it here; I see lot of prospects for vendors to supply.
Q: How many markets are you catering to for supply of fully-built trucks?
A: Our core markets are Africa, Central Asia, Middle East and South East Asia. At the moment the three hot spots are South Africa, Middle East and Uzbekistan. These are Euro-3 but in North Africa it is Euro-4. It depends on the country; some markets are still Euro-2. Going forward we want to intensify exports to South East Asian countries like Thailand, Philippines and Indonesia.
Q: Can you tell us about your product portfolio and the models you have?
A: We have between 16 and 49 tonnes with about 125 variants. We are covering all market segments; there are some segments where we want to intensify our market activities on trends related to long haulage on account of changes due to implementation of GST, truck-tractor and heavy duty mining business. It will be 31 tonne plus in long haul and 50 tonne plus in mining.
Q: What about engines?
A: For the current portfolio engines up to 300 HP and transmissions are completely localised – engines made in-house at our factory in Pithampur, and gear boxes from some vendors. For heavy duty trucks, as numbers are small, we import.
Q: Coming to manufacturing, many European companies are taking initiatives to connect with the manufacturing setup here to produce according to customers’ consumption needs. Industry 4.0 and IoT certainly help in this. MAN in Munich is very strong in this area, is an element of that adapted in India?
A: It depends on the market, the behaviour and planning cycles of customers. European markets are based, more than 90 percent, on the build-to-order concept where the customer wants to have his personally customised truck. For this, he is ready to accept a lead time of two to three months for a truck that meets specific needs to optimise his business. Here, in India, we have a flexible production system to manage that as well.
Q: Are you getting signals from India market for customised products?
A: Yes, from some customers but I see room for improvement. I had seen this trend in Russia also – 75 percent of the market was on the regular stock but customers were slowly going in for tailor-made versions.
Q: Lastly, your stints in Russia and India; can you compare and contrast?
A: Both are emerging markets with high volatility. India is a more stable economy as it doesn’t depend upon commodities, unlike Russia. The Russian market now is more dominated by European products, even from the legislation, specification and homologation point of view. In India, the market is different because the customers are different and transportation here is still made by many small players. I expect to see consolidation in the transport business in the future; I already see some high-profile transport companies doing good business