We plan to customise products for our Indian customers.
What is the current overall demand-supply scenario from different verticals?
Currently, the supply is more. The people who were manufacturing in India have pruned down their production. We also used to import and keep stocks to respond immediately to the customer?s requirement. Now we have reduced our stocks because of low demand.
Everybody estimated that the wheel loader market will cross 2,000 machines last year but actually, the total machines sold during this period is about 1,400. So it is 30 per cent less than expected. This was mainly due to the dismal performance of the mining and road sectors. The machines which were purchased in the previous year were standing idle. In the ports sector also, less handling of coal affected the use of wheel loaders.
How do you assess the potential for wheel loaders from the agri sector?
Wheel loaders do not have major applications in the agriculture sector. Only wheel loaders maximum up to one-ton capacity find applications in the agri based sugar industry; but for that also, people now prefer backhoe loaders due to their multifunctional advantage. If at all small loading is there in farms, then farmers prefer loader attachment to the tractor which is economical than a full fledged hydraulically operated wheel loader.
Is finance for buyers still a major issue?
In our experience, finance was not the major issue. Finance companies are ready to give finance; but they are cautious because of the defaults. Secondly, the cost of finance has gone up with the increase in interest rates. For the customer, the cost of production has increased whereas what the customer is getting from project authority is less. So, cash flow is a problem rather than finance availability.
What is the demand for value-added features in wheel loaders here?
Value-added features go well with equipment such as excavators. Wheel loaders are just rehandling machines and nobody is looking for any added features there. They are only looking at operator ease, productivity and fuel efficiency. We have the option for air-conditioned cabins in the machine but The majority of customers in India are not keen on operator comfort and opts for non-AC machines.
Even though there are benefits to the machines due to the various features mentioned earlier, customers are in no mood to look at these things right now. Customers now want the cheapest machine available. Also, now used machines are available in the market at a lower cost so the customers do not want to pay higher price for value additions. During this period, some of the OEMs have started developing economy models with reduced features to compromise on price. At the same time, we are using this period to develop a suitable model for Indian customers. Right now, we are selling what is produced as it is in China. In future, we plan to customise these products according to the requirement of the Indian customers.
Could you elaborate on the XCMG and its product range?
XCMG is a company owned hundred per cent by the Chinese government, with a turnover of $19 billion. It is the fifth largest construction and earthmoving equipment manufacturing company in the world in terms of turnover. XCMG has about 360 models of machines categorised across 14 major Product Groups having 40 Product Series. All are manufactured in China in its 22 manufacturing facilities. We also have plants in Brazil, Germany, Iran and Poland.
In China, XCMG is the market leader in wheel loaders, with a yearly output of 40,000 wheel loaders from its recently set up facility. Besides China these wheel loaders are popular in Southeast Asian countries and Africa. Our range varies from 1.2 tonne to 12 tonne. Smaller capacity range is used in road construction and higher capacity machines are used in mining. We are late entrants in wheel loaders in India with 3-3.5 per cent market share now in this low demand market scenario.
Which are the models available in India and how user-friendly are these machines?
We can make available any model that customer wants, right from one tonne to 12 tonne class. As far as user-friendliness is concerned, we have both mechanically operated and pilot operated models in our wheel loader range. Based on customer requirement, one can go with either the mechanically operated or the pilot operated version. In smaller capacity machines, we have both mechanically operated and pilot operated versions, while higher capacity machines are only pilot operated. So we have both the options and the customers have their choice. In India the trend has not come, but in China and other countries we even supply wheel loaders working on natural gas as fuel.
How fuel-efficient is XCMG?s wheel loader range?
Our range of wheel loaders is fuel-efficient; the cost of production is less mainly due to fuel efficiency of our wheel loaders. However, due to rupee depreciation against USD, the cost of machine is almost at same level with that of Indian machines. Downtime is less due to better quality of the XCMG range of wheel loaders. We compare our quality level with Caterpillar while our price is 30 per cent lower. For supporting these products, we have main spare parts warehouse in Navi Mumbai. Our dealers in Mumbai and Chennai also keep stock of fast moving spare parts for our customers.
They have service engineers trained by us and if they face any difficulty or need any help, we have Chinese engineers stationed in India.
Could you tell us about your dealers and distributors network?
XCMG?s policy is of two dealers per country and each dealer can hWhat is your outlook for the CE industry in general, and especially the wheel loader market in another 3-5 years?ave his own associates network in different states. Thus, we have two dealers in India, in Mumbai and in Chennai.
What is your outlook for the CE industry in general, and especially the wheel loader market in another 3-5 years?
This year saw negative growth for wheel loaders. However, if things go well after a new government comes in power, there can be 20 per cent growth per annum in the next five years starting 2015. This year will be the period to stabilise things. By 2015, the mining and road sectors will pick up, with scope for wheel loaders to grow.
We have both mechanically operated and pilot operated models in our wheel loader range.