Historically, backhoe loaders are dominating but we see that backhoe loader products might grow at a slower pace. Excavators will drive demand today as particularly in mining and infrastructure projects, earthmoving is much larger, says Dimitrov Krishnan, Vice president, Sales & Marketing, Volvo CE, India. Excerpts from the interview...
What are the current CE industry trends?
The numbers published by ICEMA clearly shows that there is a slight uptake on the larger equipment like excavators and wheel loaders. The smaller equipment like mini excavators, backhoe loaders etc have still to pick up the trend. General industry prediction is that it will continue to grow in the next three years. The market size of construction equipment was about 38,000-40,000 units last year. A 10-15 per cent growth rate is fairly decent and is possible this year. When compared to the figures of 2011 peak, the industry has the potential to go up to 70,000 units.
How do you look at the progress of project execution across the infrastructure segments?
If you see historically, for 3-4 years, the market came down primarily due to slowdown in project execution, which in turn was caused by the financial situation of the companies those are executing particularly the BOT projects. In the new projects, we expect more EPC model dominating at least in the short term, in 2015 and early 2016. Once the government is able to to solve the financial issues in BOT models, the project execution will pick up; however, the initial push will be towards EPC projects. As soon as the infrastructure sector companies are in a better position to borrow and invest in new projects, the industry will pick up. This will directly benefit the earthmoving equipment.
What sort of demand pull you anticipate from the hiring segment?
There is no specific trend for hiring segment as I seen. It will follow the general market trend. Smaller excavators and backhoes always find demand in hiring segment.
Tell us the latest product / technology trends in your range of products?
For most contractors operating equipment, fuel cost determines everything. When our designers work on our products they look into all aspects such as engine, optimizing drivetrain, hydraulics and bring down total cost of ownership.
So the key feature of our range of equipment is fuel efficiency. Volvo engine and design are known to be extremely fuel efficient. It more or less determines the benchmark on fuel efficiency in the market. Our D series excavator launched two years ago, not only the engine but also the hydraulics and structures are tuned to match with the engine providing at least over 10 per cent fuel efficiency compared to our previous models. Obviously, fuel efficiency remains our core strength. In the G series loaders launched last year, we have fuel efficient engine and also a new technology called Optishift, a transmission technology which helps reduce power consumption. So in these products we drive fuel efficiency, which remains our key feature and USP.
Is financing still a challenge?
Financing is of course a key factor in buying capital equipment. We have tied up with many capital equipment financiers and we have wide range of partners who are funding to our equipment. In the market, many OEMs have come out with captive financing of their own.
Brief us on the value additions?
We provide consultative support to our customers in equipment selection. We have software called Site Simulation with which we simulate their needs and help them choose the right optimized product and how to utilize it. Post equipment sale, we provide operator training so that the operator can use the equipment at the right way. Beyond this we also work in the aftermarket contracts called customer support agreement which is to improve the availability of equipment during operation, helping them improve the machine utilization.
When our designers work on our products they look into all aspects such as engine, optimizing drivetrain, hydraulics and bring down total cost of ownership.