Tipper Trucks: Makers Struggle to Counter Eroding Sales
With numerous factors contributing towards stifling demand of tipper truck, manufacturers are working out business strategies to hold back falling sales at par with increasing market share. P.P. Basistha takes a look.
The gradients for developing business seem to get increasingly steeper for tipper trucks manufacturers. Steep erosion in demand from mining sector, owing to legislative ban on iron ore mining coupled with tardy liquidation of coal stocks from domestic sources have taken a deep toll in business. Retrograded demand for moving construction aggregates, owing to slow execution of road construction projects on higher end and depressed movement of bulk materials from real estate construction sites on the lower end of the construction value chain, is making manufacturers struggle hard for finding newer avenues for driving business.
The present negative demand situation is in stark contrast to few years back, when irrespective of the demand contraction setting in, manufacturers could make some exceptional gains, notably in 2011-12 when gross demand for tippers stood at 62,000 units up from 48,000 units in 2010-11.The truck makers were able to built up gross sales and market share by aggressively developing products, targeting potential demand segments with appetite for newer product variants. Presence of wide demand base then dissuaded bearish business sentiments that have begun to make its presence felt in the corporate board rooms of the tipper truck manufacturers. According to industry figures, demand per month was to the tune of 3,200-3,400 units in financial year 2012 from 4,600 units as compared to 2011. Demand for units for 2012-13 has been to the tune of 45,000 units.
Steep contraction of demand base across infrastructure verticals is really source of concern on many fronts for manufacturers. First, it has resulted steeper competition. Higher interest costs of finance and altogether availability for procuring new vehicles, coupled with growing spirals of fuel costs is making the ground stronger for customers for resorting towards prompt brand substitution to get desired output from the units.
"We have been carrying out engineering improvements, so as to extend the engine maintenance intervals of our on road tippers from 40,000 to 80,000 kms, while for gear box and axles we have extended it from 60,000 hours to 1,20,000 kms. For tippers used in deep mining, the engine maintenance intervals now stand at 500 hours from 250 hours. New range of trucks to be shortly launched for cross over mining will have engine maintenance intervals at 1000 hours from the earlier 500 hours. For gear box and axles we have extended the maintenance intervals from 1000 hours earlier to 1,500 hours," says, senior executive from Ashok Leyland.
The Hinduja group company offers 9-31 tons tipper trucks for the mass segment with 160-230 hp engines. It also offers 49 tons tip trailer trucks for mining segment. It built up significant presence in tipper trucks segment through it's launch of 16-31 tons of 'U' range of tippers in recent past with 4X2 and 8X4 and 6X4 axle configuration . The tippers have 10.5- 18-22 and 14-16 cum body configuration for transportation of road construction materials, iron ore, coal, sand and blue metal, ore fertilizer and coke. The 'U' tipper trucks are also available with 'Hardox' made steel made body for haulage of rock boulders.
The new introduction, synthesized with extensive customization of body variants may have allowed the company to create space in tipper trucks market. However the fast emerging challenge, for many manufacturers amidst stiff competition, is addressing requirements for newer applications in mining involving transportation of materials through heterogeneous nature of steep gradients and curves for different size of mines, that too under different working conditions. Equipment positioning is a major challenge, as it has to be tried, tested and proofed so as to fit in the requirements, with ability to provide higher uptime across its lifecycle. The trucks chiefly have to counter weather and harsh external operating conditions.
The executive from AL informs, "we have tippers between 23-25 tons for intermediate mining applications. The trucks have hub reduction axles with 9-speed gear box, 230 horsepower engines, capable of working at 200 feet gradients."
Increasing emergence of application areas for intermediate mining is relatively new in India and holds promise for manufacturers to built up margins. Emergence of application for higher capacity mining, with size of mines becoming bigger requiring vehicles to travel at steeper gradients carrying heavier overburden materials is also a newer trend. Manufacturers are aware of the emergence of this niche segment as sales margins. However, the space is comparatively moderate than the mass and intermediate offering. According to industry estimates, prior to the demand slump, the niche market has been growing at the rate of 27-28% with demand being for 1000 units per annum. Demand for heavier capacity mining tippers is estimated to be at 100 units at present. Though space is moderate, however, business margins are higher in premium segment.
Ashok Leyland will be looking to introduce premium 400 hp tippers shortly with 16-18 cum rock body variants, capable for working at 60-62 metres depths at mining sites.
Emerging opportunities in high capacity and intermediate mining is being monitored by, tipper trucks body manufacturing major, Hyva Motors. According to Mr. Sudhir Chaudhry, GM Sales, Hyva, "we expect long term improvements in demand from the mining segment on account of growing transportation of coal from pit head stocks to various consumer utilities through mining sites and across roads. In accordance with the forecasted demand, we are focusing designing bodies that can carry heavier loads of coal cargo of various densities."
However, Mr. Chaudhury feels, there is minimal scope of making the bodies available at competitive prices as cost of production has hardened, primarily on account of rupee devaluation and altogether growing cost of imported steel used in making the bodies. Hyva is looking towards reductions in production costs, primarily by focusing on lean manufacturing along with improving the quality of the bodies. It is also looking towards making design improvements in the jigs and welding fixtures for curtailing production costs. Hyva is also developing value addition on these tippers to meet the DGMS requirement and is gearing up with the required accessories incorporated in these bodies. Mr. Chaudhury sees less scope of demand frorm replacement market on account of lesser utilization of tipper fleets at present. Hyva has four body production plants with an annual production capacity of 12,000 bodies which can be expanded to 15,000. The manufacturing plants are in Navi Mumbai, Pune, Bangalore and Jamshedpur.
According to Mr. V.K. Sahay, Head Sales & Marketing, Medium and Heavy Commercial Vehicles, Tata Motors, Tata Prima is the best truck range available in India whichever way you look at it right from cabin features, power to weight ratio, safety aspects, advance technology, quality and reliability and return on investment."
He adds, "To ensure optimum vehicle usage, the trucks are equipped with a data logger that helps measure vehicle performance and driving practices along with several parameters on a daily basis. The increased power ensures faster trips and higher profitability. An HVAC cabin (heating, ventilation, and air conditioning), pneumatic suspended driver seat, ergonomically designed instrument cluster improves driver efficiency, in turn resulting in increased productivity and faster returns on investment." Prima series of trucks are available in three models comprising 25T and 31T with 280 HP and newly launched 31T with 380HP. Axle configurations Prima 3138.K 8X4, 3128.K 8x4 and 2528.K 6x4
Though the company has presence in the premium segment of tipper trucks, exceptional demand may not be witnessed in the short and medium terms with legislative ban continuing on the iron ore sector and slow liquidation in coal. Not to mention, present higher cost of getting the vehicles in contrast with lower return of investments as utilization may not be optimum. However, given strong future demand fundamentals in coal, on account of growing demand from domestic sources followed by Coal India's signing of fuel supply agreement with power producers and expansion plans of state power utilities with captive mines and also expansion by primary steel producers with captive iron ore mines, there will be likely spurt in demand of premium segment of tippers. Hence, building up the presence in the segment can said to be justified.
However, being aware of the factors that will govern the demand trend in premium segment, Tata Motors is aggressively focussing on its mass Construck segments to increase its top and bottom line growth.
"Despite declining demand, we have gained 5 percent market share through promotion of our multi axle tippers in western, northern and southern markets. We continue to enjoy 75% market share in two axle category in the fast growing North Eastern market," informs, Mr. Sahay.
He says, "we are looking to retain and expand our existing customers base by making our tippers more productive, so as to deliver on total cost of ownership. Accordingly, we have increased Engine oil change interval for our mining tippers from 500 Hrs to 1000 Hrs. Further, fuel efficiency differential over competition has been enhanced from previous 5 percent to the tune of 10-12%."
Tata Motors Construck series comprises of trucks with GVW ranging from 16T-31 tons, engine HP ranging from 130 HP to 270 HP. In multi axle tippers range, it provides options of LPK 2518 and LPK 2523 with standard or inverted bogie suspension with options of 6 speed or 9 speed gear box. In two axle tipper segment, SK 1613 with 3600mm and 4200mm wheel base with 8.5 Cum and 10 Cum body options are available. The tippers are available in semi forward. In full forward range Tata Motors provides LPK 1613 and LPK 1618 with 10 cum tippers body.
The higher capacity niche segment may seem to be lucrative for newer entrants in the long run with emphasis on productivity and safety. However, it is not insulated from competition with existing well entrenched domestic manufacturers having a wide network for product sales and support for its elaborate product variants. This is the reason that has prompted new manufacturers setting business structures that offers products on two platforms. Diamler, one of the known manufacturers of higher capacity tipper trucks is making products available on both the mass through its 'Bharat Benz' and the niche through the 'Diamler' variants.
AMW Trucks will look towards making sales grow through its wide range of offerings for various application requirements. "Our range is quite extensive between 16-49 tons, with body variants between 8 and half cum-10 cum-12 cum16,18,20 and 22 cum. Given our own integrated in house production facility, we are well positioned to manufacture bodies for various customer requirements. In the coming months AMW would be introducing a range of Trucks and Tippers with CRDI electronically managed engines. These engines would provide best in class fuel efficiency and driveability. These enhancements would strengthen the already strong position in the construction and mining segment for our trucks", mentions Mr. A. Ramasubramanian, President, Asia Motor Works. The Gujarat based company have also carried out extension for its engine oil change interval periods from earlier 18000 - 60,000 kms for its trucks
He informs, "to increase sales and making products competitively priced, we are in a constant process of bringing flexibility and lean manufacturing in production. We are also looking to appoint dealers for newer markets." AMW presently has 123dealer points with 1500 touch points and more than 86 locations to ensure onsite support for its tippers.
Ashok Leyland will be strengthening its sales by appointing additional dealers. "We will be increasing our dealership network in Madhya Pradesh, Eastern and North Eastern India. Expansion of dealership network in Eastern India is expected to raise our market presence from existing 30% covering states of West Bengal, Orissa, Jharkhand, Bihar and North East covering Assam and Meghalaya", says the company senior executive. The southern based truck conglomerate has recently appointed a dealer in Meghalaya.
Ashok Leyland presently has 550 dealers with 472 outlets. It also has 20,000 parts outlet for genuine Ashok Leyland parts. The company claims to offer 4 hours response period given query on product support requirement.
According to senior executive, "on a regular basis, we evaluate the performance of our dealers on their ability to provide customers support on time. Based on prolonged negative feedback from the customers, we also terminate our dealership agreements. For ensuring on site support to our tipper trucks customers, we have 20 and 40 feet on site container workshops supported by a service engineer." 65 percent of Ashok Leyland's tipper trucks are from construction segment while remaining are from mining segment. Appointment of additional dealers is expected to expand its mining business.
Onsite product support for tipper trucks are made available by Tata Motors through its 135 dealers and 35 container workshops which works in close coordination with base workshops. It has over 1000 workshops and over 7700 retailers for service back up and parts availability. Tata Motors claims to have 65 percent share in tipper trucks market.
According to Mr. Sahay, "Apart from onsite support the most vital element of customer solutions is first and only of its kind Triple Benefit Insurance which provides customers with depreciation benefit, loss of income and replacement under total loss at prevailing prices.
Market expansion and better product support is also being focused by Mahindra Trucks and Buses for its tipper trucks for business expansion and retention. According to Mr. Nalin Mehta, Mahindra Trucks, "We have 57 MTBL dealerships active today. Moreover, we have leveraged group synergies and already added 270 authorized service points, drawn from the Mahindra Automotive and farm sector network. In addition, we have mobile workshop vans and mobile service vans in each dealership to take care of various service requirement and onsite support as and when required. To further strengthen our network, we have added nearly 1381 roadside assistance points to our network. These trained mechanics have been selected carefully to build our presence on vantage points on important trucking routes so that immediate assistance can be provided to the trucks that are moving on these routes."
Mahindra Trucks have put in place a 24x7 customer service call-centre for answering customer queries in English, Hindi, Tamil, Telegu, Malayalam, Kannada, Marathi, and Gujarati. As part of product support and availability, Mahindra is offering 5-year or 5 lac Km Warranty, which is transferrable. It has put in place on site warranty backed by annual maintenance contracts. For products availability, it is offering 100% finance on Chassis and up to 5 years loan tenure.
Being relatively a new brand, the company would be looking to add newer product variants. It has proposed investment of Rs.200-300 crores in strengthening the existing product lines and over Rs.300 crores in the development of the new range of ICVs and MCVs. Mr. Mehta mentions, "After completing our range from 25 to 40T HCVs, we have launched custom applications like tipper w bogie suspension, haulage tipper, cement bulker, reefer etc. Going forward HCVs and LCVs both will see a slew of launches of variants. We are very soon going to launch 9 speed bogie suspensions tipper that will help us meet customer demand for heavy duty applications." The company does not plan to enter into premium tipper trucks segment in near future.
According to Mr. Mehta, "Our tippers Torro 25 tipper, Torro 31 haulage tipper aims at a paradigm shift in terms of 920 Nm torque leading to better pulling power and 16 cum load capacity – presenting a higher earning opportunity to the transporter. In order to bring down total operation costs of our tipper trucks, we have enhanced standard product warranty (from 3000 hrs to 4000 hrs). We also have an option of extended warranty (additional 2000 hrs). Increased oil change interval to 750 hrs – will soon become 1000 hrs."
Mahindra claims to have sold more than 1200 units so far. HCV Tipper trucks pan-India ever since its launch to construction aggregates segment. The company also claims to have sold 31T haulage tipper used in coal haulage in good numbers. Mahindra tipper trucks are manufactured at its Chakan plant near Pune.
Ongoing activity at the tippers trucks manufacturer's stable heralds good for the industry as manufacturers are increasingly responding to newer applications, charactering product modifications and refinement. However, inclusive demand for the equipments will have to be stimulated through creation of infrastructure jobs in large volumes apart from financial initiatives to make the products affordable to own and operate.
The gradients for developing business seem to get increasingly steeper for tipper trucks manufacturers. Steep erosion in demand from mining sector, owing to legislative ban on iron ore mining coupled with tardy liquidation of coal stocks from domestic sources have taken a deep toll in business. Retrograded demand for moving construction aggregates, owing to slow execution of road construction projects on higher end and depressed movement of bulk materials from real estate construction sites on the lower end of the construction value chain, is making manufacturers struggle hard for finding newer avenues for driving business.
The present negative demand situation is in stark contrast to few years back, when irrespective of the demand contraction setting in, manufacturers could make some exceptional gains, notably in 2011-12 when gross demand for tippers stood at 62,000 units up from 48,000 units in 2010-11.The truck makers were able to built up gross sales and market share by aggressively developing products, targeting potential demand segments with appetite for newer product variants. Presence of wide demand base then dissuaded bearish business sentiments that have begun to make its presence felt in the corporate board rooms of the tipper truck manufacturers. According to industry figures, demand per month was to the tune of 3,200-3,400 units in financial year 2012 from 4,600 units as compared to 2011. Demand for units for 2012-13 has been to the tune of 45,000 units.
Steep contraction of demand base across infrastructure verticals is really source of concern on many fronts for manufacturers. First, it has resulted steeper competition. Higher interest costs of finance and altogether availability for procuring new vehicles, coupled with growing spirals of fuel costs is making the ground stronger for customers for resorting towards prompt brand substitution to get desired output from the units.
"We have been carrying out engineering improvements, so as to extend the engine maintenance intervals of our on road tippers from 40,000 to 80,000 kms, while for gear box and axles we have extended it from 60,000 hours to 1,20,000 kms. For tippers used in deep mining, the engine maintenance intervals now stand at 500 hours from 250 hours. New range of trucks to be shortly launched for cross over mining will have engine maintenance intervals at 1000 hours from the earlier 500 hours. For gear box and axles we have extended the maintenance intervals from 1000 hours earlier to 1,500 hours," says, senior executive from Ashok Leyland.
The Hinduja group company offers 9-31 tons tipper trucks for the mass segment with 160-230 hp engines. It also offers 49 tons tip trailer trucks for mining segment. It built up significant presence in tipper trucks segment through it's launch of 16-31 tons of 'U' range of tippers in recent past with 4X2 and 8X4 and 6X4 axle configuration . The tippers have 10.5- 18-22 and 14-16 cum body configuration for transportation of road construction materials, iron ore, coal, sand and blue metal, ore fertilizer and coke. The 'U' tipper trucks are also available with 'Hardox' made steel made body for haulage of rock boulders.
The new introduction, synthesized with extensive customization of body variants may have allowed the company to create space in tipper trucks market. However the fast emerging challenge, for many manufacturers amidst stiff competition, is addressing requirements for newer applications in mining involving transportation of materials through heterogeneous nature of steep gradients and curves for different size of mines, that too under different working conditions. Equipment positioning is a major challenge, as it has to be tried, tested and proofed so as to fit in the requirements, with ability to provide higher uptime across its lifecycle. The trucks chiefly have to counter weather and harsh external operating conditions.
The executive from AL informs, "we have tippers between 23-25 tons for intermediate mining applications. The trucks have hub reduction axles with 9-speed gear box, 230 horsepower engines, capable of working at 200 feet gradients."
Increasing emergence of application areas for intermediate mining is relatively new in India and holds promise for manufacturers to built up margins. Emergence of application for higher capacity mining, with size of mines becoming bigger requiring vehicles to travel at steeper gradients carrying heavier overburden materials is also a newer trend. Manufacturers are aware of the emergence of this niche segment as sales margins. However, the space is comparatively moderate than the mass and intermediate offering. According to industry estimates, prior to the demand slump, the niche market has been growing at the rate of 27-28% with demand being for 1000 units per annum. Demand for heavier capacity mining tippers is estimated to be at 100 units at present. Though space is moderate, however, business margins are higher in premium segment.
Ashok Leyland will be looking to introduce premium 400 hp tippers shortly with 16-18 cum rock body variants, capable for working at 60-62 metres depths at mining sites.
Capacity Shift
The Tata Prima range, of which the Construck range is a part, comprises of about 10 major variants of multi-axle trucks, tractor-trailers, tippers, mixers and special application vehicles.He adds, "To ensure optimum vehicle usage, the trucks are equipped with a data logger that helps measure vehicle performance and driving practices along with several parameters on a daily basis. The increased power ensures faster trips and higher profitability. An HVAC cabin (heating, ventilation, and air conditioning), pneumatic suspended driver seat, ergonomically designed instrument cluster improves driver efficiency, in turn resulting in increased productivity and faster returns on investment." Prima series of trucks are available in three models comprising 25T and 31T with 280 HP and newly launched 31T with 380HP. Axle configurations Prima 3138.K 8X4, 3128.K 8x4 and 2528.K 6x4
However, being aware of the factors that will govern the demand trend in premium segment, Tata Motors is aggressively focussing on its mass Construck segments to increase its top and bottom line growth.
"Despite declining demand, we have gained 5 percent market share through promotion of our multi axle tippers in western, northern and southern markets. We continue to enjoy 75% market share in two axle category in the fast growing North Eastern market," informs, Mr. Sahay.
He says, "we are looking to retain and expand our existing customers base by making our tippers more productive, so as to deliver on total cost of ownership. Accordingly, we have increased Engine oil change interval for our mining tippers from 500 Hrs to 1000 Hrs. Further, fuel efficiency differential over competition has been enhanced from previous 5 percent to the tune of 10-12%."
Tata Motors Construck series comprises of trucks with GVW ranging from 16T-31 tons, engine HP ranging from 130 HP to 270 HP. In multi axle tippers range, it provides options of LPK 2518 and LPK 2523 with standard or inverted bogie suspension with options of 6 speed or 9 speed gear box. In two axle tipper segment, SK 1613 with 3600mm and 4200mm wheel base with 8.5 Cum and 10 Cum body options are available. The tippers are available in semi forward. In full forward range Tata Motors provides LPK 1613 and LPK 1618 with 10 cum tippers body.
The higher capacity niche segment may seem to be lucrative for newer entrants in the long run with emphasis on productivity and safety. However, it is not insulated from competition with existing well entrenched domestic manufacturers having a wide network for product sales and support for its elaborate product variants. This is the reason that has prompted new manufacturers setting business structures that offers products on two platforms. Diamler, one of the known manufacturers of higher capacity tipper trucks is making products available on both the mass through its 'Bharat Benz' and the niche through the 'Diamler' variants.
He informs, "to increase sales and making products competitively priced, we are in a constant process of bringing flexibility and lean manufacturing in production. We are also looking to appoint dealers for newer markets." AMW presently has 123dealer points with 1500 touch points and more than 86 locations to ensure onsite support for its tippers.
Support & Presence Retention
With demand expected to be between 44,000-47, units on a brighter demand during 2013-14,retention of market presence amidst expanding share will be the major challenge for the tipper trucks makers.Ashok Leyland will be strengthening its sales by appointing additional dealers. "We will be increasing our dealership network in Madhya Pradesh, Eastern and North Eastern India. Expansion of dealership network in Eastern India is expected to raise our market presence from existing 30% covering states of West Bengal, Orissa, Jharkhand, Bihar and North East covering Assam and Meghalaya", says the company senior executive. The southern based truck conglomerate has recently appointed a dealer in Meghalaya.
Ashok Leyland presently has 550 dealers with 472 outlets. It also has 20,000 parts outlet for genuine Ashok Leyland parts. The company claims to offer 4 hours response period given query on product support requirement.
According to senior executive, "on a regular basis, we evaluate the performance of our dealers on their ability to provide customers support on time. Based on prolonged negative feedback from the customers, we also terminate our dealership agreements. For ensuring on site support to our tipper trucks customers, we have 20 and 40 feet on site container workshops supported by a service engineer." 65 percent of Ashok Leyland's tipper trucks are from construction segment while remaining are from mining segment. Appointment of additional dealers is expected to expand its mining business.
Onsite product support for tipper trucks are made available by Tata Motors through its 135 dealers and 35 container workshops which works in close coordination with base workshops. It has over 1000 workshops and over 7700 retailers for service back up and parts availability. Tata Motors claims to have 65 percent share in tipper trucks market.
According to Mr. Sahay, "Apart from onsite support the most vital element of customer solutions is first and only of its kind Triple Benefit Insurance which provides customers with depreciation benefit, loss of income and replacement under total loss at prevailing prices.
Market expansion and better product support is also being focused by Mahindra Trucks and Buses for its tipper trucks for business expansion and retention. According to Mr. Nalin Mehta, Mahindra Trucks, "We have 57 MTBL dealerships active today. Moreover, we have leveraged group synergies and already added 270 authorized service points, drawn from the Mahindra Automotive and farm sector network. In addition, we have mobile workshop vans and mobile service vans in each dealership to take care of various service requirement and onsite support as and when required. To further strengthen our network, we have added nearly 1381 roadside assistance points to our network. These trained mechanics have been selected carefully to build our presence on vantage points on important trucking routes so that immediate assistance can be provided to the trucks that are moving on these routes."
Mahindra Trucks have put in place a 24x7 customer service call-centre for answering customer queries in English, Hindi, Tamil, Telegu, Malayalam, Kannada, Marathi, and Gujarati. As part of product support and availability, Mahindra is offering 5-year or 5 lac Km Warranty, which is transferrable. It has put in place on site warranty backed by annual maintenance contracts. For products availability, it is offering 100% finance on Chassis and up to 5 years loan tenure.
Being relatively a new brand, the company would be looking to add newer product variants. It has proposed investment of Rs.200-300 crores in strengthening the existing product lines and over Rs.300 crores in the development of the new range of ICVs and MCVs. Mr. Mehta mentions, "After completing our range from 25 to 40T HCVs, we have launched custom applications like tipper w bogie suspension, haulage tipper, cement bulker, reefer etc. Going forward HCVs and LCVs both will see a slew of launches of variants. We are very soon going to launch 9 speed bogie suspensions tipper that will help us meet customer demand for heavy duty applications." The company does not plan to enter into premium tipper trucks segment in near future.
According to Mr. Mehta, "Our tippers Torro 25 tipper, Torro 31 haulage tipper aims at a paradigm shift in terms of 920 Nm torque leading to better pulling power and 16 cum load capacity – presenting a higher earning opportunity to the transporter. In order to bring down total operation costs of our tipper trucks, we have enhanced standard product warranty (from 3000 hrs to 4000 hrs). We also have an option of extended warranty (additional 2000 hrs). Increased oil change interval to 750 hrs – will soon become 1000 hrs."
Mahindra claims to have sold more than 1200 units so far. HCV Tipper trucks pan-India ever since its launch to construction aggregates segment. The company also claims to have sold 31T haulage tipper used in coal haulage in good numbers. Mahindra tipper trucks are manufactured at its Chakan plant near Pune.
Ongoing activity at the tippers trucks manufacturer's stable heralds good for the industry as manufacturers are increasingly responding to newer applications, charactering product modifications and refinement. However, inclusive demand for the equipments will have to be stimulated through creation of infrastructure jobs in large volumes apart from financial initiatives to make the products affordable to own and operate.
NBM&CW November 2013
