“Even though when you compare it with the last year quarter four or last year March, you find that the numbers are a little bit less but, I would say, overall, we are quite satisfied with the performance of the industry as well as our performance,” says Vinod Aggarwal, MD & CEO, VECV.

Of late, things have been slightly subdued for you. But in the month of March, there was a month-on-month growth. Is that largely because of the year-end seasonality and do you think this comeback will sustain?
First of all, if you look at the quarter four performance overall for the industry, as compared to last year quarter four, the performance has been down as far as the industry is concerned, that is also largely due to the fact that last year quarter four was very strong because there was pre-buying happening because of BSVI OBD II norms that kicked in from 1st April, 2023. So, having said that, to look at the numbers for quarter four, even the numbers for March also for the industry, I would say the numbers are quite good. The numbers have been good and as you can see our numbers also, we have also done better.

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Even though when you compare it with the last year quarter four or last year March, you find that the numbers are a little bit less but, I would say, overall, we are quite satisfied with the performance of the industry as well as our performance.

In fact, we have continued to do consistently better than the industry. And we have grown marginally even in the month of March as compared to the earlier months. And overall, for the year, even though the industry has domestic industry has grown by around 5% and above whereas we have grown by almost 9.6% or 10%.
So, I can say we are doing better than the industry and we have improved the market shares and we are quite happy with the performance.

If GDP is growing at 8%, if nominal GDP is growing at 12% to 13%, CV is a representation of GDP growth. Why is the sector, the industry which you represent, growing at 4% to 5%? Should not the numbers be higher?
I think there are various reasons. First of all, if you look at the capacity of the trucks. Now, when we say heavy-duty trucks, there is more and more migration that has happened to high-tonnage trucks. You will see that the growth in the tractor segment, which are 55-tonne trucks, that is very high and the share of 55-tonne trucks in the overall numbers has gone up significantly.Similarly, the share of multi-axle rigid trucks, that also has gone up. Whereas the single-axle trucks, that growth is not that heavy.So, therefore, due to this migration, if you look at the overall capacity, it is good. Then, other than that, if you look at last few years, the growth last year was very strong and last to last year basically 22-23 and before that also, it was strong.

It was basically recovering from the COVID period. And now, I would say you are right that the nominal GDP growth is 12%, 13%, the CV industry overall should grow better than that and we will see that happening I think in the future, it will happen.

Let us also understand what the outlook is when it comes to your exports because there has been a recovery there on a month-on-month basis. Even on a year-on-year basis, there has been a jump. Do you think that exports can do even better or stay at the current levels?
Exports are currently at rock bottom. In fact, if you look at the South Asia country, where India has been largely exporting, like Bangladesh, its market is down more than 80% as compared to the earlier peak of 18-19.

Similarly, Nepal market is also down more than 85%. So, due to that, our exports are down significantly from the country. However, last two-three months, there has been some recovery that has started happening and hopefully, this is the bottom and here on you will only see recovery happening.

Hopefully, the situation in foreign exchange is improving even in South Asia and then we are seeing more traction in Middle East.

Middle East, even though the market is not that big, but there has been growth of exports from India. So, Middle East exports are going up. African exports are also down, but not to that extent. In some of the countries in Africa also, there is better traction.

And exports have started happening to Latin American countries and also Southeast Asian countries, which are till now largely represented by Japanese trucks.

So, therefore, future potential for exports is very high because we will see more and more exports into the newer regions and you will also see recovery happening in South Asia.

I do not see too many orders which are coming your way for electric buses. You have technology. You have a global tie-up. That space is growing. New incumbents are getting new orders. They are getting all the headlines. Why is that? Is there a conscious strategy not to move into electric buses aggressively?
If you look at overall deliveries of electric buses, till now in India for all the electric buses by all the players put together, it is around 6,000 or 6,500, not more than that.

So, the numbers are very small. And then at the same time, the business model which is there for electric buses, that is a very tough business model.

It is not a very simple business model. You have to give the commitment for next 12 years. You have to take the exposure on state transport undertakings for next 12 years.

And till around last tender, the government has been insisting that OEMs should take the full exposure without any payment security guarantee.

Only in the last tender, there has been some relaxation in that, that there is some payment security guarantee has been given.

And of course, the new tenders, when they come in, we will participate. Before the last tender, we were not even participating because we are not into this business at any cost.

So that is the reason you have seen we have been a very-very careful player. We have also supplied electric buses, it is not that we do not have the products. We have all the range with us. We have nine-meter buses. We have 12-meter buses. We have five-and-a-half tonne truck. We already are selling electric trucks. So, we are there with all the products, but we will sell at the right price and with the right business model.

So, how many buses do you plan to sell in FY25?
I think still the numbers are not going to be very large. I think last year, we sold around 200 and close to 250 buses and this year, it is not going to be very large. It will be maybe around, at the best case, maybe 1,000, 1,000 plus, like that.

So, can I say that you are unlikely to be a serious player and you are unlikely to make serious investments in the electric bus business?
It is not the question of seriousness. We have made the investments already. We already have the products. We already have made the investments in technology. But we cannot sell the products at losses. We cannot. We are very clear that if we are going to incur losses for next 12 years, we will not be there.

We understand that in the two-wheeler space, electric two-wheelers are doing reasonably well. We understand that in the passenger four-wheelers, hybrid cars are doing reasonably well. Where is the fuel technology really headed in the truck and in the bus segment? Will it be EV? Will it be still ICE or it could be taken over by hydrogen eventually?
As of now, if you look at the trucks, for the medium-duty trucks, alternate fuels, like the CNG is very popular. CNG is making good headway. For the long-haul trucks, LNG trucks are going to become popular.

Already, fuel sales have started happening. There are more and more fuel stations also coming up for LNG. So, we will see more traction going forward in the LNG.

Electric also, as I mentioned, we have started selling in five-and-a-half-tonne trucks and then, of course, we are also developing 55-tonne trucks.

We are also developing electric tippers. So, we will see more and more traction coming in the very, you can say, higher-tonnage trucks or in the small trucks or the medium trucks.

So, it will be a slow and steady game. You will not see very large numbers coming in because still the acquisition cost is high and we are also talking to government because even in FAME, there is no incentive provided for trucks, even though it is still there for two-wheelers, that also is coming down a little bit.

But for trucks, there is no incentive at all. So, therefore, acquisition cost definitely is high which is hurting the consumers.

So, no one wants to put in the upfront investment. So, therefore, you will see slow and steady growth. As far as the buses are concerned, you will see more and more electric buses in the intra-city movement.

Already, more and more tenders are opening up. Government is making consistently improvements in the tender conditions. Even the new tenders, which have been opened recently, there have been made conditions. They have also now removed the commitment of OEMs into the entire tender. Now they have given some relaxations, where even if there are other infrastructure companies or other companies who will be there in the tender without any commitment of the OEM, that also now they are permitting, provided there is a minimum size of these infrastructure companies or these companies who will take these tenders.

So, therefore, we are seeing more and more flexibility, more and more improved terms. So, you will see more tenders coming in buses. Buses will see more traction in electric technology as compared to trucks. It will happen faster.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)


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