Even greater change is thundering along the countrys roads and highways. The commercial vehicle segment is rapidly modernizing, trading up in class, size and technical sophistication. This rolling revolution is being carefully watched by lubricant marketers, who are plotting their strategies for meeting Indias transport needs. They know that the status quo is shifting, and those who cannot adapt could be left in a cloud of dust at the side of the road.

According to the Ministry of Road Transport and Highways, there were more than 3 million goods carriers and 669,000 buses registered as of March 2002. Whats more, the Indian commercial vehicle market is very fragmented with an estimated 75 percent of the vehicles owned by individual owners of just one to three vehicles. Those owning four to 50 vehicles hold 18 percent of the market – and a mere 7 percent are large fleet owners controlling over 50 vehicles.

With the increasing availability of vehicle financing – every truck and bus manufacturer has its own finance company – and the preference for high-tech and high-ticket vehicles, there is a definite shift towards organized fleet ownership. When mega-infrastructure [road-building] projects like the Golden Quadrilateral and North-South and East-West corridor projects are completed, the primary traffic on highways will be hub to hub through multi-axle vehicles and tractor trailers, expects R. Ramesh, chief operating officer with Gulf Oil. For secondary movement, medium- and light-commercial vehicles will be used. An educated guesstimate foretells that a decade from now nearly half the commercial vehicle segment will consist of larger fleets.

This growth in fleets is also expected to provide an automatic boost for driver training and discipline, as no owner will wish to jeopardize a high-end investment. Presently it is mandatory for a Volvo truck to be driven by a Volvo-trained driver. This ensures that they are intensively trained in defensive and economical driving, loading practices and routine maintenance, remarks Volvo India marketing manager Sohanjit Randhawa. Indian Oil, Hindustan Petroleum and Bharat Petroleum, the three state-owned oil giants, have spruced up their gas station network to provide a host of facilities to truckers – shower rooms, dormitories, eateries, debit cards and fleet cards – in an effort to protect their turf from new private-sector truck-stop entrants like Reliance, Shell and Essar, who have their own blueprints for cornering a share of highway traffic.

LOYALTY AND AFTERMARKET

Does the individual owner adhere to OEM-specified oils after the warranty period is over? Opinion is divided. There is some empirical evidence to show that consumer behavior does not record change with OEM recommendation, though with the entry of expensive vehicles things are changing, believes Sudhanshu Vats, Castrol India Ltd.s marketing vice president. Vehicle owners may switch brands but they largely stay at specification levels of the recommended oils, suggests TotalFinaElf Indias senior vice president, P.K. Mittal: The value proposition is mainly driven by the overall package of product quality, service levels, relationship and availability.

One thing is clear: After the warranty period is complete, most owners refrain from patronizing the pricey OEM authorized service centers. Fleet owners and state transport corporations use their own workshops, and the bulk of individual owners utilize the services and lubrication advice of small mechanic outlets. The workshop is the base station of the individual truck owner, and the mechanic (who is almost invariably trained on the job) is king.

With increased vehicle sophistication will the humble mechanics influence get watered down and more professionally run outfits with necessary computerized diagnostic equipment and formally trained technical staff take over? Most technocrats whom LubesnGreases approached felt that the days of the unlettered mechanic would gradually come to an end and a new class of modern service outlets priced between the expensive OEM authorized service centers and the rock-bottom priced mechanic shops was bound to emerge.

However, K.R. Shankaran, executive director of direct sales at Hindustan Petroleum Corp., cautions: It might be a mistake to underestimate the versatility of the Indian mechanic even though he has little formal education; note how the same mechanic now repairs Hyundais CRDI [Common Rail Direct Injection] diesel engines.

Meanwhile oil companies continue the two-pronged approach of wooing both the mechanic and the truck driver, and hoping to land exclusive contracts with fleet owners. Without exception all players concentrate their energies on the vibrant bazaar and have a gamut of promotional schemes like gifts, lotteries and incentives for distributors, dealers and individual owners. Spending on television advertising, print media and billboards form part of routine activity.

As vehicles climb in sophistication, service from lube players gets classier. It is our endeavor to bring in awareness of lubricant cost/life cycle cost of the engine rather than the lubricant cost alone, explains S.K. Swaminathan, Indian Oil Corp. executive director. With fleet owners we have moved from selling oil to selling a solution, stresses Vats. TotalFinaElf provides the services of the Belgium-based ANAC, the unique engine diagnostic service, asserts Mittal. And Valvoline Cummins provides the service of a unique oil analysis program called POST – Progressive Oil Sample Testing – where we have allocated considerable resources, indicates Naveen Gupta, managing director of that joint venture.

ANYONE FOR CO-BRANDING?

With an eye to meeting government-mandated emissions limits (called Bharat Stage III), oil companies across the board are ready with their compliant offerings, usually meeting API CH-4 and/or Mercedes-Benzs MB 228.3 specifications. While most have OEM approvals, a good number have OEM co-branded genuine oils tie-ups, as well. While some candidly confess that co-branding makes little business sense – the royalty demanded by OEMs being astronomical – and the customer is willy-nilly compelled to pay a high price, they also grant that most big players are in a race to acquire co-branding not only for the visibility it affords but also for corporate prestige.

Vats of Castrol India, which has a co-branded diesel engine oil with Tata Motors, begs to differ. Apart from the faith and trust our brand name commands, co-branded oils assure genuineness and availability which are critical for new technology engines. And much of the cost of the royalty is actually squeezed out of our margins, which we hope to recover by growing our volumes. Bharat Petroleum Corp., too, has a co-branded API CF-4 15W-40 oil with Tata Motors.

It is only natural that Gulf Oil and Ashok Leyland should have an exclusive tie-up, as both belong to the Hinduja Group conglomerate. Gulf Oil, which has always had a diesel engine oil focus, is responsible for Ashok Leylands entire factory fill and authorized service station network, and our new co-branded API CH-4 and [Volvo-spec] VDS 3 oil, which is also downward compatible, will be priced in such a manner that the users total lube bill will be reduced by 30 percent, declares N.C. Sekharan, head of lubricants at Gulf Oil. While Ashok Leyland uses only Gulf for its entire factory fill, Tata Motors sources its factory-fill requirement from several players.

Valvoline is another brand that has a direct link: Our global association with Cummins helps us in promoting our latest 15W-40 heavy-duty diesel oil in India, points out Gupta there.

TotalFinaElf is the sole claimant to a Volvo co-branded product. Our genuine oil exceeds the Volvo prescription of VDS 2 and VDS 3, and has provided the customer with the best technology at the highest levels of service support in a niche market, boasts Mittal. Indian Oil and Hindustan Petroleum are hopeful of having their own co-branding tie-ups soon.

FAKES, FUELS AND THE FUTURE

The big three, Indian Oil, Hindustan Petroleum and Castrol, take the hardest knock from counterfeit lubes. All three concentrate on generating consumer awareness, using packaging checks like holograms and protective seals. Counterfeiting is a menace to well established brands, feels Indian Oils Swaminathan, and Hindustan Petroleums Shankaran opines that, The free availability of inferior-quality imported base oils has fueled the trade. Oil companies along with local authorities have organized raids at suspected filling plants as well as container and label manufacturing outfits. However, the cat-and-mouse game is so old it is lumped as an occupational hazard.

Will the growth of pricey new-generation, high-tonnage vehicles drive smaller vehicles off the road? Will there be a sharper rural-urban dichotomy, with old vehicles banished to dusty inland routes? Will the rustic mechanic be sidelined?

And will unskilled drivers continue to tackle the roads hazards with an arsenal of incense, amulets and imprecations, rather than training and discipline? Or will talismans someday be hung for sentimental reasons, to remember a time when luck played a greater role than technology? The next decade holds the answers.