Frost & Sullivan and Automechanika Webinar Highlights
To understand the ramifications of the COVID-19 crisis on the commercial vehicle (CV) industry and ongoing stakeholder responses, a webinar on “Commercial Vehicle Industry – Overcoming the COVID-19 Crisis” – was conducted recently by the Automechanika team, along with Frost & Sullivan as Knowledge Partner. The webinar focused on the wide-ranging challenges and disruptions created by the crisis at both regional and global levels and, importantly, the unprecedented new business opportunities opening up due to the current churn. While stakeholders concurred that the industry had been temporarily derailed, the overall narrative was that it would successfully navigate the ‘new normal’ to emerge more resilient and robust.
For the panel discussion, I was joined by key regional leaders in the GCC’s CV industry, including Mr. Abdullah Bahattin Topcu, Managing Director, Ford Trucks, Middle East and Africa; Mr. Arijit Dutta Chowdhury, Vice President & Head, International Operations, Ashok Leyland Ltd.; and, Mr. Joerg Mommertz, Sr. Vice President, Head of Sales – MEA, Man Truck & Bus. We touched upon diverse themes:
- The segment likely to recover the fastest in the GCC region
According to most of the panelists, the light commercial vehicle (LCV) segment will register the fastest recovery in the region. Reflecting Frost & Sullivan’s findings, they emphasised that recovery would be driven by the significant increase in retail sales of LCVs for last-mile delivery solutions.
According to Mr. Abdullah Bahattin, LCVs have a more diverse product portfolio compared to their medium-duty (MD) and heavy-duty (HD) counterparts. Any impact on macro-economic parameters like GDP, construction activity and infrastructure development will have a more profound effect on the MD-HD trucks segments due to their more limited application base.
- Leadership for organisational sustainability
Mr. Bahattin highlighted two key fundamentals in response to what leadership fundamentals – both external and internal – were critical to ensuring organisational sustainability during the pandemic. The first focussed on building sustainable value chains by improving the systems supporting the business. The second centered on empowering dealers and distributors to offer competitive / best price products to customers.
According to Mr. Joerg Mommertz, ensuring overall customer satisfaction, in conjunction with safe service experiences, would be the key to successfully navigating through the pandemic. Talking about internal practices, he highlighted the need to provide employee training to ensure that sales & aftersales services were not disrupted and customer engagement remain unaffected by new work from home (WFH) practices. In terms of external processes that would promote organisational stability, he emphasised the need for capability building of channel and distribution networks through training programs.
- The future of Trucks-as-a-Service business model in the GCC region
Mr. Mommertz highlighted that the success of the Trucks-as-a-Service business model in the GCC would depend largely on infrastructural and technological development. With governments ramping up initiatives and investments in technology, the model was poised to experience success in the region.
He added that most service providers have started offering Fleet Management Solutions (FMS) in the Middle East as a first step. They are now looking to leverage the learnings from the successful deployment of Trucks as a Service business model in Europe and the UK across the GCC.
- Impact of COVID-19 on the prospects of HD buses
With many orders having been placed for large HD buses in 2018 and 2019, the major question for the panellists was how they perceived the segment as being affected by the pandemic in terms of fleet utilisation and / or regulatory change. Mr. Arijit Chowdhury pointed out that the bus market in the GCC comprised four important application segments: schools, staff, tourism and Road Transport Authority. Explaining further, he noted that sales to the tourism application segment were likely to decline by 30% to 35%, because of the subdued inflow of tourists in the region. Simultaneously, the school segment would witness an even steeper decrease in 2020 on account of the reduced capacity utilisation of school bus fleets due to the lockdown. He added that the GCC bus market is likely normalise operations by March 2021 on account of Expo 2020, FIFA World Cup 2022 and other government sponsored tourism initiatives.
- MAN Truck & Bus plans for the bus segment in the Middle East
Mr. Mommertz stated that bus sales were receiving a fillip from government orders and the public transportation segment in the GCC and Middle East region. MAN Truck & Bus were looking forward to providing state-of-the-art premium city floor buses equipped with advanced telematics solutions for the public transportation sector in the GCC.
Conclusion: Future-Proofing Strategies
The first wave of the pandemic was highly disruptive and key learnings from that period will inform responses to the likely second and third waves of disruption:
- Scaling up investments in R&D: Making products and services ready for customers to use so that their business profitability remains unaffected even if there are future disruptions.
- Accelerated adoption of digitalised processes: Adopting digitalised processes and wider use of digitalisation to encourage product and service uptake by customers will help businesses become more resilient.
- Strengthening channel and distribution partner networks: Extended warranties, coupled with a focus on quality and flexible service offerings, will help CV manufacturers ride out the second and third wave of the pandemic.