The newest entrant to the heavy-capacity commercial vehicle market of India, Scania Commercial Vehicles India (SCVI), has been in the news for almost a year now due to its significant investments in the country. The Swedish company continues to have a joint venture in India with Larsen & Toubro (L&T) in the mining segment. We recently quizzed Anders Grundströmer, Managing Director, SCVI & Senior Vice President, Scania Group on the progress SCVI has made in India thus far.
Construction of the Scania India plant at Narsapura, near Bangalore, is on track for timely completion. Grundströmer confirmed production of trucks will begin in June, 2013, while production of buses will commence from the first quarter of 2014. Built with an investment of about Rs 250 crore, the plant will be a completely knocked down (CKD) facility and will produce trucks and buses. The drivelines will continue to be imported for now but the company is looking at localising some of the smaller supporting components. The truck portfolio is expected to comprise of the P 360 4x2, P 410 6x2, R 500 6x4 and G 460 6x4. The vehicles produced in India are primarily intended for domestic sales only. Grundströmer added that the company doesn’t have exports in its present plans, as the models produced here are from the global range and are already being produced elsewhere with the same specifications.
The company is actively looking at localisation to improve its cost competitiveness wherever possible from a technical and cost perspective. On the mining trucks, the company has already achieved 18 % localisation, which will pave the way for the truck and buses in the future. On the buses, Scania aims to achieve 100 % localisation for the body. He added that Scania is very happy with the Indian supply chain and that these suppliers are constantly improving their quality and output. The Narsapura plant will also benefit from close proximity of suppliers.
In January, 2013, Scania launched a new range of luxury buses and coaches, Scania Metrolink. This range has been introduced exclusively for India and will later be developed into a global platform. Talking of the stiff competition in the premium bus space, he said that Scania only aims to operate in the premium space and expects to command about 20 % marketshare in the next five years.
Grundströmer told us that the initial response for the buses has been positive and he expects the product to do well in the long run. The bus will be available in three variants – 12 m, 13.7 m and 14.5 m long with a seating capacity of 45, 49 and 53, respectively. For now, Metrolink bus range is what the company is looking at and plans to support it with an extensive support network. Any decisions regarding newer products are yet to be taken.
Talking of market-specific product adaptation, he said that Scania products do not feature any engineering done specially for India. The products to be launched here are part of the global portfolio and are being used in other emerging markets with conditions similar to India.
Grundströmer believes that things could’ve been a lot easier in India if the tax structure was less complicated. The present structure forces companies to put a lot of effort at multiple levels of planning. He added that if the government implements the GST, it could help the entire industry significantly, as it will make it easier to do business and help the country grow as well in turn.
Based on the investments and market response, Scania aims to sell 2,500 trucks and 1,000 buses in India in the next five years. The plant has been built keeping in mind future expansion and with little investment the company can almost double the capacity if required, highlighting that Scania is well prepared for the future in India.
Text: Arpit Mahendra