Volvo Penta: "We Are Looking Beyond Engines Sales in India to Leverage Business Presence"

Swedish Engine manufacturer, Volvo Penta's presence has been marked by twenty years of its existence in Indian market. It is one of the strategic business divisions of Volvo group. The division claims to derive 49% of its sales from the European market and 27% from Asian region. Volvo Penta claims to draw 75% of its business by selling its engines to the industrial segment while 25% accounts for the marine segment in India. Currently, the company derives 20% of its sales through marketing its engines in construction and mining sector in India to off-highway mobile units based on its association with its global OEMs. With growing requirements of more fuel efficient and higher reliable engines from OEMs catering to the Indian construction equipment market, Volvo Penta is aiming to leverage its presence in growing construction equipment business, through targeting varied application areas by entering into partnerships with OEMs. Mr. Jonas Nilsson, Head India Operations, Volvo Penta, highlighted the company's future growth strategy in a recent interaction with P.P. Basistha:

What would be your our expansion strategy in potential segments in Indian construction equipment business?

With our high powered engines, rated 105–565 kw, delivering higher level of fuel efficiency and low maintenance costs, we are looking for construction equipment business segments in India that require faster duty cycles and commensurate higher uptime. This includes compressors, concrete pumps, and material handling equipment, involving rough terrain, all terrain cranes and all other variants of mobile cranes. Volvo Penta has presence in India through the major players in these segments. One of the key business areas, we are looking for expanding our business portfolio in participation, is mineral extraction and processing were we have strong presence globally. We will expand our business portfolio in this segment in India.

Are you looking for entering into association with any prospective Indian OEMs involved in mineral processing for technology tie-up?

we are closely looking for Indian mineral processing OEMs, and with our reliable, fuel efficient and low lifecycle costs power packs we are confident of securing business in this segment.

Higher initial costs remain one of the prime deterrents with the OEMs behind engines procurement on the back drop of the market requirements looking for moderately priced products. How do you look to increase your business presence in this scenario in India?

I'd like to remove the misconception with the Indian OEMs and end-user on higher initial costs, based on the fact that though the initial costs of engines are an important factor for OEM's, however, fuel contributes to almost 95% of the total operating costs across the lifecycle of the equipment. Needless to say, higher fuel costs contribute to higher operating costs. Volvo Penta's fuel efficient engines highly score on this. According to feedback received from our customers, they have witnessed fuel savings 5-15% with our power packs. Based on our long global experience, working jointly with OEMs for designing the right solutions, we can play an important similar role with Indian OEMs as being technology partners to address technology gaps and produce reliable and fuel efficient solutions based on their required applications and duty cycles, thereby reducing their fuel consumption.

Based on the requirements of Indian OEMs array of individual products and standards, how are the engines featured and designed to have complete equipment integration, especially with auxiliary systems such as radiators, transmissions, air intake, and exhaust and common components. How is installation flexibility ensured?

Our strategy to promote the Volvo Penta engines is based not only on outright sales but also on complete technological partnership with customers and their requirements. Our engines are produced in accordance with application engineering, extensive feedback received from OEMs, and end users of the products globally. Hence, the engines feature installation flexibility is well positioned to get themselves integrated with the transmission systems and other parts with ease. Volvo Penta engines are electronic in their entity. All our engines are electronically controlled by the Volvo Penta Engine management system which regularly monitors and gathers data from a number of sensors in the engine and adjusts the fuel supply and injection timing at lightning speed. This maximizes fuel efficiency and engine output at any given workload and the response to throttle opening is improved. It also enables precise integration of the engine with the machine that it powers and provides enhanced engine protection. The engines have built-in flexibility to perform in different modes. Our engines are designed to ensure high power to weight ratio. Volvo Penta engines are performance optimised and can be customized to suit every application need, including duty cycle requirements. On flexibility and integration, I would like to add that Volvo engines are lightweight, compact, and easy to build into machines and equipment where space is scarce. In underground load and haul equipment, mobile and stationary crushing and screening equipment, and drill rigs, these engines perform with least possible environmental impact. Volvo Penta has over 100 years of experience working with equipment manufacturers, supplying end users with off-road machinery and equipment. This has resulted in unique application expertise and a broad range of practical applications.

What are the OEM support and cooperation for future product up gradations? How are aspects like prototype performance assessment in varied working conditions addressed based on the emerging requirements of the Indian customers? What about affordability issues business expansion and retention?

Cooperation with OEMs for their present and future requirements is Volvo Penta's major activity towards its product development process. Our central sales engineering department undertakes necessary cooperation with OEMs and develops suitable products as per the requirement of the OEM, trouble-free of operations. The engineering sales provide installation data and guidelines coupled with training. It also undertakes critical activities of prototype performance assessment. The underlying purpose of prototype performance assessment is to check the basic given performance parameters of the engines within demanded limits from Volvo Penta. Further, to ensure that the engine performs well overtime.

Affordability is a major area being continuously focused by Volvo Penta. Though, presently bulk of our 7-16 litres of our engines are imported for the Indian market. However, our sourcing group is carrying out investments and looking at areas for possible localization of the engines intended for industrial applications for the Indian market. The setting up of an engine manufacturing plant at Pithampur, is a major initiation towards the direction. With demand attaining critical mass in India, we will utilize our Pithampur facility. Customer support is another major area for business expansion and retention of end-users of our engines, are provided the support of improved oil sampling programme and conditionally monitoring support through our software and remanufacturing. We would expand and retain our business banking on the support of our strong and wide network of 75 dealers and service outlets across 34 locations across the country. We propose to expand further to 100 numbers. We will strive to garner extensive customer/OEM feedback to carry out engineering modifications in the engines to make them further well integrated with the equipment.