German auto major Daimler’s Indian arm Daimler India Commercial Vehicle (DICV) is exploring new areas such as defence vehicles, off-highway engines, LCVs among others to address future cyclical challenges in the domestic commercial vehicle industry.
Satyakam Arya, managing director and CEO, DICV said that beyond trucks, the company want to promote innovation culture, new business ideas and revenue streams.
While exploring venturing into allied space including defence, off-highway engine manufacturing, LCVs among others, for innovations, the company said it is ready to fund, mentor and collaborate with education institutes and freight aggregators.
The diversification is also part of company’s derisking strategy and to enhance the revenue, said Arya.
In 2019, DICV clocked around Rs 6,300 crore revenue, which is 10-12 per cent increase compared to 2018.
Speaking about defence foray, he said at present Government policy doesn’t support foreign companies to supply for defence purpose, but recently the government has indicated it may relax the policy by April to enable companies like Daimler to participate. Today this segment is dominated by Indian companies including Tata, Ashok Leyland and Mahindra.
For defence segment DICV is looking at developing 4X4 trucks.
On whether the company would look at Light Commercial or Small Commercial Vehicles, Arya said, today less than 9 tonne segment is about 500,000 market in India and there is enough room for new players.
If a new player wants to enter this segment the right strategy is to enter with a electric product and DICV will explore this opportunity.
DICV closed 2019 (calendar year) with a whole sale of 14,500 BharatBenz sales in India as compared to 22,500 in 2018, a drop of 36 per cent. Retail sales dropped by 29 per cent to 15,300 from 21,600. DICV’s market share stood at 5.8 per cent at the end of 2019.
During the same period truck industry declined by 34 per cent due to continued poor demand. The reasons being axle load norms, liquidity crunch, GST, BSIV inventory correction and economic slowdown.
DICV’s exports grew by 14 per cent to over 8,000 units in 2019.
On 2020, Arya expects industry to decline by around 10 per cent and in worst case it will be 20-25 per cent.
He is hopeful that DICV will continue the profitable growth and will do better than industry during BS-VI era.
“Our access to Daimler’s worldwide network to technological expertise allowed us to efficiently localise our globally-proven Euro06 solution for India’s BSVI emission norms. This helped us to control development cost,” said Arya.