Economic Times: December, 2016
New Delhi: India has the potential to grow into one of the top five non-European markets for MAN Truck & Bus AG by 2020, says the company's global CEO Joachim Drees. In an interview to Sharmistha Mukherjee, he says demonetisation has hit sales, but the situation should improve by the second half of 2017. Edited excerpts:
How important is the Indian market for MAN Truck & Bus?
India is a key market and I come here often to focus on operations. We strengthened our management team here. Joerg Mommertz (appointed India CMD earlier this year) has been with MAN for years. He knows MAN really well, but more importantly, he knows the customer and the needs of the market. We put one of our most experienced managers here to increase volumes and also to improve exports out of India.
What has kept overseas firms from dislodging domestic players in India's commercial vehicle market?
Indian competitors have the right products and are very strong in the budget segment, which is big. But as the market becomes more sophisticated, there will be more opportunities for global truck makers to grow. Efficiency has to grow, total cost of ownership has to go down, tonnage has to go up. We will see similar behaviour in the Indian market; it is just a question of time.
We were just discussing the regulations coming into place such as the new law that all trucks have to be provided with air-conditioning. Then the new regime on GST, the demonetisation drive, all these measures will lead to changes in business models. And we have localised our trucks and are very well prepared to meet the changes in the market here. We know that our competition is very strong but we can gain volumes and improve our market share in India.
You started operations in India through a joint venture that you terminated in 2012. How has the solo journey been for the company?
I think it was the right move. We are now in the process of increasing our footprint in the market by bringing in new products. We unveiled the CLA EVO range of trucks, offering our customers the benchmark in fuel efficiency. These trucks are close to 100% localised and designed at our R&D centre in Pune.
What role does the R&D team here play in the company's global operations?
Globally, we have two hubs in Germany for engines and truck development. For buses, we have some engineers in Turkey and Poland. And then, we have the centre in Pune, India. They develop trucks for the local market and also for exports. Besides, sales responsibility is also split region-wise. Some products are built only in India, so Mommertz and his team also have the responsibility to drive exports out of India, in collaboration with local partners and importers.
There are countries where we import both European-made premium trucks and trucks from India, so we have to streamline processes.
How has demonetisation impacted the company?
This year, we have to take a little bit of a downturn in November and December because of the demonetisation. But for us, India is one of the markets which are growing the most right now. I think the initiatives taken by the government will enhance growth further, maybe not in the very short term. These are very bold steps, but right steps which the government is taking.
When do you expect the Indian market to revive? What kind of growth are you expecting in 2017?
We are more ambitious for 2017. The market should pick up in the second half of next year. Four weeks ago, I could have given you the numbers, but given all the changes to predict market trend in 2017 is a bit challenging.
Does India have the potential to emerge as one of your key production bases?
We look at Europe as one market and then we look at markets out of Europe and there India can break into top five, domestic market plus exports, by 2020.