Volvo Transforms Mobility Of People, Goods In India

Volvo Group is now in its 19th year in India, employing about 3,500 people directly and, including its joint ventures, close to 15,000 people indirectly. It has three plants, one each for Volvo Trucks, Volvo Buses, Volvo CE and Road Machinery, and the JV plants for trucks, buses and the global hub for medium-duty engines.
“The Volvo Group’s mission is to drive prosperity through our transport solutions. In the Indian context, this translates into creating value that leads to infrastructure development, urban development, progress in urban mobility and raising the standards in the area of safety and holistic sustainability. We envisage an India progressing towards a safe and efficient transport system, marked by improved mobility for both goods and passengers,” Kamal Bali, Managing Director, Volvo Group India Private Limited (VGIPL), told T Murrali, of AutoParts Asia in an exclusive interview.
The excerpts:-

Q: What is the current scenario in the Indian commercial vehicle (CV) sector?

A: The growth rate for the automotive industry in the medium to long- term, which would depend on the country’s real GDP growth, would be between eight percent and 12 percent. The key is the demand drivers like the successful implementation of GST, logistics and trucking efficiency across state boundaries, massive increase in infrastructure spends (especially on roads) by the government, creation of dedicated freight corridors and the growing need for sustainable public transport. These, together with the new Motor Vehicles Act with focus on safety, end-of-life policy and stringent emission norms (BS-VI by 2020), FAME programme and smart cities, will provide a huge fillip to the automotive industry in general.

Q: How will be the next phase of growth?

A: The next phase forward is not going to be about numbers. What we have to measure is the ability of the industry to take part in the national priorities of sustainability, commitment to COP environment, economic growth, rapid urbanisation and better quality of life for people. The industry will have to take the lead in this road forward.
The next couple of years may see moderate growth rate of four to seven percent for the CV industry in view of the time lag between projects’ clearance and commencement of work on ground. However, the construction equipment (CE) industry continues to be on a roll and I expect it to continue to grow at double digits for at least the next decade. The country is at a transient stage. While the industry is seeking directions and an eco-system to get to the critical mass and economies with new solutions, the authorities are demanding demonstration of viable solutions from the industry. We need to marry these two ends and drive change.

Q: Do you think there will be any role for alternate propulsion?

A: We also must be aware that while we talk of electro-mobility, we also have a scenario where the fleet operators are still not able to put enough buses on road for basic public transport needs. There are quite a few smaller but fast growing cities, which let cars dominate and create congestion on the roads. While we talk of improved efficiencies, we must be aware that while a long-distance coach in India does around 150,000 km a year, a bus operator in South Africa does about 400,000 km with a similar coach.

Q: When do you think we can see a transformation in India?

A: Of course, things are changing in India. There are clear indications that the higher tonnage CVs are eating away share from the medium tonnages (MCV), which means that we are on our way to do more with less. The HCV segment will see more momentum and the MCV share will decline.
When we use higher capacity vehicles, the need to consolidate fleet business, the loads, customers, and routes will increase, giving way to more organised and professional fleet operators. This trend will continue, but we need to see how fast can it move, because our challenge is to reduce the logistics cost in India which is at nearly 13 percent of GDP, over 50 percent higher than the average for advanced economies.
Urbanisation is a lot more challenging but exciting. While trucking demand and trends can be aggregated at a national level, the public transport demand is State-wise. Also, the solutions we build have to be sustainable – they have to be economically viable, environment-friendly and socially inclusive. Public transport has to be the priority in every city, or else we will be stuck with congested and immobile cities. When it comes to cities and urban mobility, the vision, plans and the determination or the will power to implement have to be bigger, stronger and holistic.

Q: Where do you think is the problem?

A: The authorities do understand the issues but implementation of the solutions is the challenge. We need to find an optimal mix among regular diesel, hybrids, and full electric year by year, before we reach our final ambition of zero emissions with public transport becoming the mainstay of mobility in the cities. Products like the Volvo Hybrids are on the ground in India and we have seen initiatives across the board in this direction. Here the maturity and attractiveness of these solutions will matter a lot. Providing right experience in our demonstrations can easily make 30 percent of the fleet being hybrids or electric by 2025.
But if we do not, then the job can be harder and the industry will come under pressure. On a simple analysis, the demand for buses will be good, as we see replacement requirements and urban population growing. The volume demand for buses will remain good in the long-term, both for the city buses and the inter-city coaches. But then, as said before, this will no longer be the measurement of the health of our industry.
As we have seen in most developed markets, the industry will split between high capacity vehicles and LCVs, backed by hub and spoke distribution models. There will be additional costs in the vehicle, but the overall increase in efficiency and consolidation of businesses will offset this increase. And when that happens, the benefits of improvement in driver habits, using modern systems like telematics, and proactive service management will improve customer profitability and thus the demand for value-added services.

Q: Where do you see VGIPL in the progression of Indian CV industry?

A: At Volvo Group, we are both proud and fortunate that our focus lies in the areas that are also our national priorities, such as infrastructure development, urbanisation, and skill development backed by vehicles that are safer and sustainable. And this is complemented by our presence in trucks, buses, construction equipment and engines for the marine and industrial applications. Today, along with our JV with the Eicher Group, we are the third largest CV manufacturer by volumes.
We have intense engagement with every segment where we operate: Volvo City Buses in 34 cities in India and across every key highway in the country; we facilitate movement of a third of the overburden in Indian coal mines; and our CE business is present in every third large infrastructure project in the country. We are now present in the country with multi-brands – Volvo, UD, Eicher and SDLG – catering to various segments and customers

Q: How do you see the future for VGIPL?

A: We are confident of the future because we are present in the segments that are progressive with solutions that do ‘more with less’ when compared to typical solutions. With every measure that the industry moves to higher performance, demand for our kind of solutions will grow. We are not the biggest player by numbers in the country. But the Volvo Group has the richest experience when it comes to the impact its brands have made on India over the last two decades through high-performing solutions and new paradigms. I dare say this with many Volvo trucks and CEs
operating for 19 hours a day, and buses operating twice the typical distance, even weaning people away from their personal vehicles to public transport.

Q: How was the year 2016 for VGIPL?

A: Overall, we grew in double digits in 2016 from the previous year. And, 2017 has seen further growth over the same period in 2016, driven largely by our CE business on account of increased spends in the infrastructure and the growing need for high-capacity, high-performing solutions. As we see greater efficiencies in the trucking industry thanks to the crucial GST reform, you can expect a significant role for Volvo Trucks, especially in the long-haul HD segment.
We are working with the authorities in the areas of electro-mobility, alternate fuels, logistics’ efficiency and public transport concepts, bringing to the fore our global experience and success in some of these areas. We will continue to play a leading role in the area of safety, together with focus on drivers, as India seeks to raise the bar on safety standards across the automotive industry.
We will also focus on new technology solutions, both on the product and soft services. Over 90 percent of our trucks in India and a majority of our buses are equipped with the I-shift gearbox, the first step to automation. I-shift also saves fuel.
Volvo is today a very strong, premium and an esteemed brand in the country. Our ambition is to remain dedicated to driving prosperity through sustainable transport solutions.

Q: Connected vehicle has become a topic for every forum everywhere. What is your own take?

A: Connected vehicle is getting closer to reality, and maybe CV industry will witness that quicker than cars. Recently we displayed two solutions – a self-driving truck in the mines, and the five-trucks platoon in Europe. In that sense we may be ready quicker when regulations come. The problem sought to be solved is very clear – ‘connected vehicles,’ will reduce safety concerns, reduce fuel consumption and impact on environment, and improve logistics’ efficiency. Over the years, the Volvo Group has developed several ‘backbone systems’ in this framework, resulting in fuel efficiency, greater safety and better overall performance and driver comfort. Some of these include higher level of electronics, emergency braking system, 360 degree all-around vision, adaptive cruise control, Volvo dynamic steering, lane keeping and changing support, electronic stability programme and similar ones.
Studies for the US alone indicate a potential to save 30,000 lives, 5 billion less hours in congestion, 80 percent lane capacity improvement, and 40 percent fuel economy improvement. The benefits are indeed compelling.

Q: Will these concepts make sense for markets like India?

A: With the favourable socio-environmental impact, economic benefits and the problems that these features and technologies are seeking to address, it makes a lot of sense for any country to adopt these solutions. If you do not consider the initial capital cost alone, but do a holistic comparison comprising life-cycle, social and environmental impact costs, it will more than justify itself. Of course, we will need to create awareness, a new culture and mind-set shifts which are indeed a slow process. Above all, for any transformation you need strong leadership, transparency, purity of purpose and political will. This is India’s best chance to leap-frog.

Q: Do you see opportunities in Digitalisation and IoT as they influence manufacturing and distribution ?

A:Digitalisation and Industry 4.0 are the flavours of the current times and are going to become more and more relevant. Industry 4.0 is much discussed in the West, where lack of manpower, aging population and the need to be competitive in the emerging global environment, are important considerations.
The opportunities to integrate seamlessly raw materials, component suppliers, the product, the manufacturing system, the logistics and the final customer are enormous. The gains include optimised inventory, real time response to customer needs and enormous efficiency through value-added activities.
The steps towards digitalisation and IoTare connected with parallel development in 3D printing, cloud analytics, 3D technology in general, robotics, smart logistics and the convergence of R&D, manufacturing, after-market, logistics, the final product and customer.

Q: Can you share the experience at VGIPL?

A: At Volvo Group in India we are operating in this direction. We have quite a high degree of digitalisation in our product development and manufacturing, including robotics. In our local factories we have digitalisation. The real steps ahead will lie in operating within a collaborative eco-system.
In our medium duty engine factory at VE Commercial Vehicles (VECV), we have over 30 percent automation. The flexible final assembly line boasts of automated and guided vehicles and smart cell technology which can assemble 166 components in 120 seconds without human intervention. The plant looks like fully automated.

Q: What are the opportunities for aftermarket in this transition to new mobility and connected vehicles etc.?

A: Aftermarket is a key area since it spans the product life cycle and the associated customer experience. But having data on anything that ‘moves’ and its wear and tear means a huge amount of predictability that needs to be built-in. A concurrent example of this is in Volvo Trucks where intelligent vehicles are connected to back-end systems. The trucks are able to talk and update their status and circumstances – ensuring there is no down-time. Using digital technology, networking and knowledge of the application, the Volvo Group hopes to arrive at a point where we achieve zero downtime. To that effect we already have systems on-board our trucks, construction equipment and buses. These systems have the capacity to support from basic positioning services to service planning and management and interactive communications and decisions.

Q: Tell us about the activities of the business units under VGIPL?

A: Each of our business areas has an in-built time-tested relationship with the various segments we are addressing. In most cases, many of these segments have been established by Volvo Group itself. Volvo Group is now in its 19th year in India, employing about 3,500 people directly and, including our JV, close to 15,000 people indirectly. We have three plants, one each for Volvo Trucks, Volvo Buses, Volvo CE & Road Machinery, besides our JV plants for trucks, buses and the global hub for medium-duty engines.
Starting with Volvo Trucks, we remain the number one manufacturer in the high- performing mining segment and the (over dimension cargo) ODC segment having set the standards in the segment. Volvo CE is experiencing an outstanding growth phase on account of increased road construction, mining activity and an overall infrastructure development. We have a strong share in the CE market, especially for large excavators. The Volvo CE introduced a highly localised paver for the Indian market.
Within the construction equipment range, we also sell the SDLG brand which includes motor graders and wheel loaders. We export almost 20 percent of our CE products to other Asian countries and Latin America.
Volvo Buses have become generic with the luxury bus category. We remain leaders in the low floor city bus and the luxury AC coach segments. We have embarked on the electro-mobility path with the first delivery of India-built hybrid buses to Navi Mumbai. Volvo Buses are exported to the South Asian countries and South Africa and are on their way to Europe. Volvo Penta continues to growin its chosen segments and is a leading importer of engines in the country. We are actually one of the key providers of marine solutions for the navy and patrol boats. Since last month, Volvo Penta engines are being manufactured in India, at the new dedicated production line at our JV, namely the VE Powertrain (VEPT) plant.
The company is ready to serve Indian customers with off-road industrial engines that are made in India. Following the inauguration of an exclusive Volvo Penta production line at its manufacturing base in Pithampur in Madhya Pradesh, customers are now taking delivery of the 5 and 8-litre engines being produced in India. Volvo Financial Services (VFS), an NBFC, is a separate legal entity.

Q: Tell us about your plans for the next five years?

A: The Volvo Group’s mission is to drive prosperity through our transport solutions. In the Indian context, this translates into creating value that leads to progress in the areas of infrastructure development, urban development, urban mobility and raising the standards in the area of safety and holistic sustainability. We can envisage an India progressing towards an efficient transport system, marked by improved mobility for both goods and passengers.

Q: How are you aligned with the Automotive Mission Plan (AMP) 2026?

A: I would say we are quite aligned with the AMP objectives and will continue to increase our contribution. To begin with, we have now a solid ‘Make in India’ footprint with factories across trucks, buses, construction equipment where we will continue to increase the localisation level. We have started new lines for Volvo Penta engines. India is now the global hub for our medium-duty engines produced in Pithampur which supplies these engines, including the Euro VI engines to Volvo Group globally.
India is now the 3rd largest R&D site within Volvo Group globally, supporting key global and regional product projects. There are nearly 1,000 engineers located in Bengaluru for R&D activities and another 1,500 in IT services supporting the Volvo Group.
We had focussed on skill development even before we sold our first Volvo vehicle in India. Today we have covered almost 90,000 drivers under the Volvo Driver training programme and this figure is almost 190,000 if we include our JV training.
We also train CE operators in our industry, besides teaming with GMR to support underprivileged youth in remote areas to become operators, including supporting them in placement. We are now tied up with IISC Bangalore on advanced research projects. On the other end, we have the RASTA institute where we provide PG degrees in Road Technology besides consultancy in that area.

Q: What is your take on the aspect of ‘safety’ in India?

A: When it comes to safety development, which is a crucial aspect in India, we had set the standards across the industry even before the current regulations were set out. We continue to exceed them and aim to co-operate with all the stakeholders in this area.
In areas like end-of-life, Volvo Trucks are over 90 percent recyclable. For enhanced emission norms like Euro VI, we produce these engines in India for our global markets. Hence a transition would be easy. We will expand on all these areas and continue to drive change in collaboration with all stakeholders.
We continue to encourage sustainable transport through programmes like the Volvo Sustainable Mobility Awards, and the Annual Volvo Nobel Seminars on sustainable transport.