Adopting SCR At The Vehicle Level Will Increase Costs By 10-15 %

Adopting SCR At The Vehicle Level Will Increase Costs By 10-15 %

Interview March 2019 VECV Volvo Eicher Adopting SCR Vehicle Level Increase Costs

The adoption of SCR Technology has been rather slow in the price sensitive Indian market as the cost of ownership is high. Auto Tech Review caught up with Vinod Aggarwal, MD & CEO, VE Commercial Vehicles (VECV), to understand how the commercial vehicle industry is bracing up to adopt this technology in order to be BS VI-compliant.

Vinod Aggarwal joined Eicher in the year 1983 and since then has handled various assignments across the tractor, truck, bus, gear and engine businesses. He took over as Group CFO in 2006 and subsequently took charge as the President of Eicher Trucks and Buses in 2009. He was appointed CEO of VECV in July 2010, and in October 2016, he was given the additional charge of Managing Director of VECV. Aggarwal has played a crucial role in taking the joint venture’s technological advancements to the market. Aggarwal has vast knowledge of the Indian ecosystem, and has been spearheading the company in bringing the best of commercial vehicles to the Indian roads.

ATR _ What kind of synergies have Volvo and Eicher been driving through your decade-long joint venture journey?

Vinod Aggarwal _ The foundation that we created for this joint venture from day one has been extremely strong. This explains why Volvo Group made this JV an exclusive hub for the manufacturing of its Euro 6-compliant medium duty engine (up to 15 tonne) for its international commitments, which they had been sourcing from another manufacturer. On the other hand, VECV had a huge responsibility to live up to the targeted cost while ensuring high quality.

We have adopted a lot of technology from the Volvo Group into our products, including renewing our entire product line. The engine that we have been manufacturing for Euro 6 compliance has been adopted for Euro 3 and Euro 4 norms as well for fitting into our heavy duty Pro series range.

Subsequently, the entire engine was synchronised with our other drivelines. Further, Volvo Group’s engine manufacturing system (EMS 3.0) was adopted, which led to the introduction of a lot of electronics into the vehicle, followed by an even cabin technology (a four-point suspended cabin) from the Swedish company. Online fuel coaching, cruise control, telematics were linked to the electronic architecture of the engine to ensure better productivity for customers.

It will be relatively easier for VECV to migrate to BS VI norms as we have access to advanced technologies though our partnership with Volvo Group

Give us an insight into VECV’s seven-speed transmission that was launched for its medium duty vehicle range six months back?

VECV’s vision is to drive modernisation in commercial transportation space, both in India and developing world. VECV is the only player in the medium duty range to launch a seven-speed transmission against the industry dominant six-speed transmission. In the first phase, the seven-speed transmission was launched in Eicher Pro 3015 and Eicher Pro 1114XP to optimise drivability, infuse fuel efficiency and productivity, while reducing driver fatigue. The new four cylinder E494 engine with seven-speed ET50S7 gear box is designed for smooth gearshifts and less torque interruption. Coupled with Volvo Group’s Engine Management System (EMS), fuel coaching and on-board diagnostics (OBD), it provides a competitive edge to our medium duty range.

VECV also recently introduced AMT on its Eicher Pro 3016. The truck is equipped with an Intelligent Shift Control Actuator that automatically performs clutch and shift operations and eliminates clutch pedal and frees driver from gear shifting, thus reducing their stress and fatigue and minimising the performance gap between skilled and less experienced drivers. This makes the vehicles apt for variety of applications such as e-commerce, consumer goods, industrial goods, agriculture produce, etc.

How is VECV planning to comply with stricter emission norms that are due in little over a year?

We have both the technologies available with us – Exhaust Gas Recirculation (EGR) as well as Selective Catalyst Reduction (SCR) technologies that were launched with BS IV implementation. The acquisition cost and the cost of ownership goes up with SCR technology and that is why its adoption in the industry has been relatively slow. However, both these technologies will be required to comply with BS VI norms since there is a need to bring down NOx and particulate levels, as it will be a quantum jump in technology. Adopting SCR at the vehicle level will increase costs by 10-15 %, as it will also need diesel particulate filters (DPF) and particle oxidation catalysts (POC). This is why VECV is creating awareness among CV customers to shift towards SCR. The sooner customers understand the value proposition, it will be easier for them to switch to SCR technologies when BS VI norms are implemented in April 2020.

VEPT is already manufacturing Euro 6 engines for Volvo’s international commitments. Will you be leveraging the same engines for Indian conditions as well?

The Euro VI engine that we are supplying from VEPT (Volvo Eicher Powertrain) is built as per European standards. For India conditions, the long block (base engine) is ready and will remain the same; however, the developments will be on aftertreatment like Fuel Injection Pump (FIP) and other peripherals to make it suitable for Indian road conditions. VECV is ready with one CNG engine – Eicher’s E483, a four-cylinder 3.3 l engine that is BS VI-compliant and has been certified by ICAT. It will be relatively easier for VECV to migrate to BS VI norms as we have access to advanced technologies though our partnership with Volvo Group. The auto industry is also grappling with another challenge of complying with CAFE norms for more fuel-efficient vehicles, but there will be no choice as everyone will have to comply with regulatory requirements. The government is working with industry bodies like ARAI and ICAT for CAFE norms, but more clarity is required on that front.

There is still lot of resistance for the adoption of value trucks due to price war

What’s your take on new axle load norms and trailer codes that will lead the industry towards safer roads?

These are futuristic developments that will also need enforcement at the ground level. It is better for the auto industry as customers gets to load 15 % more on their vehicles; so, OEMs will also have to step-up to develop more suitable products with higher horsepower engine, better steering control, and braking systems to comply with newer regulations. The auto industry has not been impacted immediately as the government has allowed customers to load existing trucks as per the new norms. VECV has already come out with a 55 tonne GVW tractor, 47.5 tonne rigid truck with twin lift axle with Eicher 6048. We are working on it and will come out with better products that are more suitable for new load norms.

Today, our logistics cost account for over 13 % of GDP, whereas the world is hovering around 7-8 %. Newer supply chains and e-commerce companies are making things more organised across the industry. With GST, a lot of wastage is already getting cut down and consolidation of warehouses is happening much faster. When you set up huge warehouses, the last mile distribution from the warehouse to cities and distribution within cities have to be well defined. The entire landscape will change, and when there is a lot of focus on timelines, you need better trucks.

Give us a brief insight into your R&D activities?

We spend up to 4 % of our revenues on R&D activities. Our team of over 600 engineers is striving to develop newer technologies related to engine development and transmissions along with other necessary requirements. The centre works in tandem with R&D departments of Volvo Group to suit each other’s needs as per the market requirements. Volvo Group also adopted some of VECV’s expertise in frugal engineering.

Are there any areas of concern that you wish to address in the near future?

The shift towards higher tonnage vehicles is happening as there is a lot of focus on productivity, with GST implementation and hub-and-spoke model becoming more and more relevant. The migration towards value trucks is happening but it is still slow. There is still a lot of resistance within the auto industry due to the price war. The migration towards trucks with fully-built cabins and modern features is still slow and the chassis sales still dominates.

There are still a lot of customers that are not looking at the total cost of ownership (TCO) model. VECV is trying to create awareness about TCO rather than the initial acquisition and bring customers’ attention towards the safety aspect. Earlier, the government was also mulling making AC cabins mandatory but now there is a regulation for blowers only, keeping AC in truck cabin as optional. Customers in the tipper segment are asking for ACs, as it impacts the productivity of the driver.

What’s your assessment about the shifting gears of the Indian CV industry over the years?

The CV industry has witnessed 40 % growth over the last few months. And within that, heavy duty trucks have grown by 50 % and light and medium duty (LMD) range trucks have also posted similar figures, whereas buses have registered 20 % growth. And within heavy duty segment, the construction segment has grown by 88 %. Trucks in the 12-15 tonne category have witnessed huge growth, largely driven by the e-commerce segment. There is strong replacement demand as well as robust demand from the FMCG segment. Demand for consumer durables is growing; and so is the e-commerce industry. Demand from the rural segment has also been good as monsoons were good last year. The government has undertaken various initiatives in its road construction programme. Overall there have been a lot of positives.

However, it is important to keep a close watch on the NBFC stress prevailing in the economy. Availability of funds with them will be critical for the industry to remain buoyant. Interest rates linked to that may go up and that may affect the market sentiments. If the availability of funds is impacted, there will surely be some impact on the CV industry as well. For now, we have not seen any impact on the CV industry.

Can you update us about VECV’s new upcoming facility?

The new facility located at Bagroda, 18 km from Bhopal, will see a phase-wise investment of Rs 400 cr. The land acquired for the plant is close to 150 acres and will be equipped with an initial capacity of 40,000 units. The plant will start with the LMD range and will remain flexible to manufacture heavy duty trucks as well as per market demand. The facility will raise our capacity from currently 90,000 units to 1.3 lakh units annually.

TEXT: Anirudh Raheja