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Indias Commercial Sector Heats Up


You of the evil eye may your face be blackened!

Mother I survive with your blessing.

Oh distant traveler your home beckons.

Whom the one above protects no mortal can harm.

These are just a sampling of the warnings and invocations routinely painted on Indias trucks and buses. The drivers cabin invariably sports a little altar enshrining the image of a favored deity or saint; this is garlanded with fresh flowers each morning as incense sticks are lit and a brief prayer recited. A little voodoo-like talisman is mandatory, consisting of a lime, a piece of charcoal and a few crisscrossed green chilies on a string under the chassis.

That after such creative efforts at self-preservation, drivers are notoriously rash, flouting every rule in the book, is one of the many paradoxes of life on the Indian road. Riding the Indian highway is no picnic. Poor road conditions, overloaded vehicles, undisciplined driving are all part of the game.

Another part of the game: to tax the limits of a vehicles endurance, force it to yield its last spark of useful life and then extract more value from its remains. As a nation India must qualify as the mother of all recycling. We are culturally not very good at destroying, muses Sudhanshu Vats, Castrol India Ltd.s marketing vice president. Vehicles of the 1960s and 70s still ply the streets, though increasingly these are found in smaller towns as heavily polluted metro cities have imposed a ban on vehicles that are more than eight years old. (Pollution is such a severe health concern that in April 2002, the countrys Supreme Court abruptly ordered half of New Delhis buses off the road until they converted to run on clean, compressed natural gas, not diesel.)

Yet over the past five years or so things have definitely changed for the better. Court-ordered diesel emission standards, a massive countrywide highway construction drive, the entry of new generation vehicles with higher fuel efficiencies and tonnage, and a buoyant economy have brought a new maturity to the commercial vehicle scene. Last months introduction of Bharat Stage III emissions norms (which are equivalent to Euro III restrictions) in 11 major cities and of Bharat Stage II norms (Euro II equivalent) for the rest of the country, brought a massive push for technology upgradation and cleaner ambient air conditions.

Leading the Market

According to the Society of Indian Automobile Manufacturers, a total of 166,102 medium- and heavy-duty commercial vehicles were produced during the fiscal year ended March 2004, a gain of 37.8 percent over the previous year. Of this, passenger vehicles such as vans and buses account for a mere 16.6 percent, the rest being goods carriers. Significantly, exports (8,112 vehicles) grew at an even faster pace – 43.9 percent – despite a steep climb in steel and rubber prices. Figures for the 11 months ending February 2005 were encouraging as well, indicating 23.6 percent growth in production and an astonishing 75.6 percent growth in exports over the same period a year earlier.

Two big players, Tata Motors and Ashok Leyland (market shares 63 and 29 percent respectively), historically have dominated the medium and heavy commercial segment. Ashok Leyland has a very strong focus on the bus segment with a huge share in state-owned public transport and private fleets, while Tata Motors has a traditional thrust in the much larger truck segment. Tata Motors recently acquired Daewoo Koreas commercial vehicles business to add products and capacity to its range.

Smaller players include Eicher Motors, Swaraj Mazda and Volvo India. Volvo, despite its modest market share, has public recognition and its brand name is synonymous with hi-tech comfort. With MAN, Mercedes Benz and Hyundai in line for their debut, the highway promises to get more crowded.

Scale and Sophistication

According to the Ministry of Road Transport and Highways, there were 3,045,000 goods carriers and 669,000 buses registered as of March 2002 (latest available data). Both figures include light commercial vehicles, too.

Though an exact breakdown is not available, the Indian commercial vehicle market is very fragmented with an estimated 75 percent of the units owned by individuals who have one to three vehicles. Thirteen percent of the fleet is held by those owning five to 50 vehicles, and a mere 7 percent by large fleet owners controlling over 50 vehicles each.

Time was when most heavy vehicles produced were on a 9- to 10-ton, 120 horsepower, non-turbo-charged, single-axle platform. Tata Motors and Ashok Leyland gradually moved to the 16-, 25- and 35-plus ton, turbocharged multi-axle level. As Bharat Stage I and II emission norms were introduced, first in select cities and progressively for the rest of the country from the year 2000 onwards, engine design underwent dramatic change.

We have gone from naturally aspirated to turbo- charged engines and on to turbocharged inter-cooled engines, and there is increasing use of rotary fuel pumps, VCO and Consac nozzles, explains Ashok Leylands M. Natraj, executive director, product development and advanced engineering. Typically injection pressures have increased and therefore peak firing pressure has also increased, he adds.

For meeting Euro II emission norms, changes to fuel injection equipment, combustion chamber and injection timing were done, and for meeting Euro III norms strategies like improvement of the combustion chamber, changes in injection timing and adoption of electronic fuel injection were followed, explains R. Sampath, deputy general manager of the Engine Research Centre of Tata Motors, which also has a longstanding collaboration with Cummins.

Sohanjit Randhawa, marketing manager, Volvo India, underscores Volvos reputation, We chose to create and develop the tractor-trailer and multi-axle segments which we believe will define the future of the Indian transport industry. Volvo, which leads the 40-ton plus segment, has been selling Bharat Stage III compliant trucks since 2003. Volvo buses are very visible in the air conditioned, luxury, intercity segment, and are now a ticket brand, asserts Randhawa, meaning that passengers demand a Volvo ticket by name.

As users demand higher payloads, increased maintenance intervals and durability per unit cost together with reduced downtime, heavy duty diesel engines are being designed to deliver higher power density, reduced fuel and oil consumption while simultaneously extending or maintaining service intervals, explains Naveen Gupta, managing director of the joint venture Valvoline Cummins Ltd.

Climbing Specs

Oil companies have always been responsive to any change in the commercial vehicle profile. The diesel engine oil market, core to all players, is estimated at 430,000 metric tons, or around 65 percent of the automotive lubricants segment and is expected to grow at the rate of 4 percent this year despite the dampening effect on volumes of extended-drain oils.

The late 80s saw a shift from the use of the monograde MIL-B category to MIL-C monogrades, the main impetus being the doubling of oil drain intervals from 8,000 or 9,000 kilometers (5,000 or 5,500 miles) to about 18,000 kilometers. We had the privilege of introducing the first MIL-C monograde long-drain (18,000 kilometer) oil in 1984, recalls K.R. Shankaran, executive director, direct sales at Hindustan Petroleum Corp. Ltd. More rapid change was in the works, though.

In response to Bharat Stage I norms in 2000, and the consequent control on particulate emissions, heavy commercial vehicle manufacturers raised their specification levels to API CF-4 15W-40, and the pattern of diesel engine oil recommendation and usage which was stagnant for almost 15 years changed dramatically, says Indian Oil Corp. Executive Director S.K. Swaminathan. This change however was driven entirely by tightening emission norms; drain periods remained unchanged.

Bharat Stage III emission norms introduced in selected cities in April this year have seen diesel engine oil specifications notching up to API CH-4 levels, and with Euro IV equivalent adoption still five years away, API CH-4 is set for a long innings, predicts Swaminathan.

Adds P.K. Mittal, senior vice president of TotalFinaElf India Ltd., Bharat Stage III norms are likely to bring into focus oils with lower sulfur-ash-phosphorus chemistry, which provide better protection to exhaust systems equipped with precious metals.

Tata Motors and Ashok Leyland vehicles presently have oil drain regimens at 18,000 and 16,000 km inter-vals, respectively, and both are very shortly about to double their drain interval recommendations, at which time API CH-4 usage will gain faster currency. If EGR (exhaust gas recirculation) gains ground, then even API CI-4 is not a far cry.

The current pecking order in diesel engine oil sales volume is topped by API CC, at roughly 32 percent, followed by API CD plus Mack T-7 (27 percent). Top-tier products meeting CG-4, CH-4, MB 228.3 and VDS-2 hold just 1 percent.

However, a cross-section of opinion predicts that 10 years hence the biggest chunk of the diesel engine oil cake – 40 percent – will be at API CF-4/MB 228.1 levels, followed by API CD/CF with Mack T-7 at 35 percent. Most companies base this forecast on the markets growing preference for oils that can offer a higher viscosity index, improved cold-cranking and lower NOACK volatility. Fortune also will nod towards fuel-saving multigrades from 20W-40 to 15W-40. Increasing demand for Group II+ base oils is anticipated too, especially to achieve the more stringent API CH-4 and CI-4 categories.

Meantime, on the highways progress can seem slow. Overloading and poor maintenance of vehicles, putting huge stress on tires and engine oil, is almost universal as enforcement agencies are famously lax. Typical problems are high top-up consumption, leakage, poor quality seals and badly maintained oil filters that result in contamination of oil with dust.

Lubricant cost typically accounts for 1 to 2 percent of a vehicles total running cost and since lube-related engine deterioration is presumed to be gradual, most drivers depend on subjective assessments of touch, smell and color to decide when to change oil – the rule of thumb being every 12,000 to 15,000 km or once each month. The owner stores a barrel for oil changes, but drivers often use cheap, low-grade oils to save on their top-up pin money.

Education is the key to scientific practices, feels Castrols Vats. The owner is always very worried about downtime so if we can establish value in the customers mind regarding the use of appropriate oils, we can influence change, he says. We have to change the Indian mentality favoring breakdown maintenance over preventive maintenance, adds Shankaran of Hindustan Petroleum.

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