VE Commercial Vehicles Limited (VECV) is an equal joint venture between the Volvo Group and Eicher Motors Limited. VECV includes the complete range of Eicher’s commercial vehicles, components and engineering design businesses as well as the sales and distribution of Volvo trucks. VECV has range of vehicles in its portfolio for mining and construction applications like heavy and light duty tippers, transit mixers, cement and fly ash bulkers. VECV’s product platforms are also designed to cater applications like petroleum, oil and lubricants (POL) tankers and truck mounted cranes.

In an interview with B2B Purchase, P Ravishankar, Executive Vice President Sales, Marketing and Aftermarket, VE Commercial Vehicles Ltd shares his views on the factors driving the procurement of mining- and construction-related vehicles.

Market scenario
Talking about the current market trends, Ravishankar, Executive Vice President Sales, Marketing and Aftermarket, VE Commercial Vehicles Ltd says, “With infrastructure investment set to go up, demand for construction equipment will rise further. Equipment sales are estimated to expand at a CAGR of 9.7 per cent to 82,000 units during FY06-16. The construction equipment industry’s revenues are estimated to have reached $ 5.1 billion by FY12. Revenues increased at a CAGR of 6.6 per cent during FY07-12 and are further estimated to rise at a CAGR of 24.8 per cent on rapid infrastructure development undertaken by the Government of India.”

Buying factors
Speaking on the major factors a buyer should consider before making a decision of buying vehicles for mining and construction applications, Ravishankar says, “There are multiple factors that a buyer should consider like the number of projects he has in the pipeline, how compatible the equipment are with the projects and whether they are matching up with the required quality standards. Also the versatility of the equipment i.e. how the equipment can be used for other activities in various projects should be considered.”

Procurement drivers
Focusing on the factors driving the procurement decision making apart from pricing, productivity and durability, P Ravishankar says, “Provision of after-sales service support is critical as the vehicles for mining and construction applications undergo considerable wear and tear thus maintenance of machinery becomes necessary after a period of time. Companies are looking forward to increase their backup of trained technical professionals to cater to maintenance demand in addition to focussing on human resource development, to create a motivated sales and service force. Also, the duration of the projects also drive the decision making. If the project will be running for a longer time, then buying the equipment will make a better decision.”

Lease or buy?
Stressing on the factors a buyer should consider while determining whether to rent or buy vehicles for mining and construction applications, Ravishankar says, “There are many factors a buyer should consider like the financial state of the buyer. The buyer must analyse which option would end up in costing more to him. When you own the equipment, there are maintenance and operating costs but in case of renting the equipment, apart from rental fees, the purchase price and maintenance cost are also marked up.”

Another main factor is the duration of project. “It is always considered a better decision to buy the equipment if the projects are of longer period. With the ownership of equipment, the buyer will be able to react to any unexpected changes in the project. But in case the projects are of short duration, it is advisable to rent the equipment,” Ravishankar suggests.
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Provision of after-sales service support is critical as the vehicles for mining and construction applications undergo considerable wear and tear thus maintenance of machinery becomes necessary after a period of time.

P Ravishankar, EVP Sales, Marketing and Aftermarket, VE Commercial Vehicles Ltd