Tata Hitachi - Rahul Shorey, National Head – Construction
The central tenet of the transition to BS IV compliance is to ensure that the equipment is more environment friendly and fuel efficient.
As CEV IV norms entail better quality of fuel to be supplied by oil companies, there is a significant positive effect on engine performance and the expected life of machines as well.
The transition to the new technology will lead to an increase in prices of the equipment - especially in the short term. This is where we are trying to help customers realise the benefits on long-term costs of equipment operations.
We have reached industry-leading standards in terms of hydraulic oil change intervals.
We have increased the oil and filter change intervals to reduce the maintenance costs of our equipment. This will also reduce the environmental impact caused by frequent oil disposal.
Many of our customers already have tippers in their fleet, and are therefore familiar with the usage of BS IV and BS VI compliant tippers, whose engines and after-treatment systems are similar to the ones being used on CEV IV on-road construction equipment.
For first-time buyers, we have factored in the training and familiarisation at the time of commissioning of our equipment. This includes safety precautions, and proper operation and maintenance of the systems – particularly with respect to the use of urea in the upkeep of the after-treatment system.
We believe that this technology adoption will be easier than the implementation of the first emission norms for engines with the incorporation of turbochargers in the 1990s.
We see the challenge of selling the higher priced machines as well as the opportunity to position the right type of machine based on applications.
In terms of demand, we do see some impact given the significant increase in prices of these machines. We are also watching closely, the impact on rental rates because of this change. Therefore, OEMs like Tata Hitachi, who have a wide range of products in backhoe loader, wheel loader and excavator segments, will benefit from this opportunity.
We have already launched the fuel efficient SHINRAI PRIME CEV IV compliant backhoe loader, as well as the TL340 PRIME CEV IV wheel loader. Our portfolio also includes a wide range of mini excavators like TMX20 Neo, ZAXIS-23U, ZAXIS-33U and EX70 to address specific customer requirements.
We have tied up with financers to offer longer funding tenures.
Given that the implementation of CEV IV emission norms has led to an increase in prices, and that the backhoe loader market is largely a hirers’ market, we have tied up with financers to offer longer funding tenures. This will reduce EMI burdens on our customers. In addition, we are also offering a moratorium for the first EMI to manage the lean season during the monsoon period. We are also offering a lower EMI scheme for Shinrai Prime with select financiers and promoting them through a digital campaign.
The narrowing of the price levels between excavators and backhoes, is expected to have an impact on relative volumes.
The increased prices are expected to impact first-time buyers and we expect to see an impact on volumes. We, however, expect growth in the construction equipment industry later this year, driven by the government’s thrust on urban and rural infrastructure and the substantial budgetary allocations this year. The capex outlay of the Central Government alone is up 26%, on a year-on-year basis. This will boost demand for construction equipment. Additionally, highway and road construction will support demand for wheel loaders.
The narrowing of the price levels between excavators and backhoes, is expected to have an impact on relative volumes. We will continue to watch this play out. A significant differentiator for the backhoe loader will be the mobility advantage combined with a resale market that is more resilient than that of excavators.
NBM&CW August 2021
