For an expat to have spent 10 years at a stretch in India is perhaps a record of sorts.

Erich Nesselhauf has no clue if it is, except that he has enjoyed every minute of his tenure at Daimler India Commercial Vehicles (DICV). As he prepares to leave by the end of this month, there is every reason for him to feel pleased with BharatBenz, which is now a well-known truck and bus brand in this part of the world.

The outgoing Managing Director and CEO also has enough material to write a book on his India experience right from the time Daimler decided to set up its commercial vehicle business here. Whether he ends up doing it is a million-dollar question though!

“I am happy (with my tenure) because the business has been set up and is successful. Everything is falling into place now. I have made so many friends and relationships in India that leaving now after 10 years is in a way sad,” he admits.

According to Nesselhauf, the India stay was never short of its share of excitement and challenges without one boring moment. From his point of view, getting to set up a supply chain in the country was quite memorable, especially when “we had no idea who to pick”.

There was, likewise, a host of imponderables on the location for the plant and the localisation agenda where each component required specific skills and this, in turn, meant identifying the right suppliers. “A lot of them had no clue about trucks or even exposure to automotive. We developed them and these first-timers have grown over the years,” says a visibly pleased Nesselhauf.

Today, the localisation level is over 90 per cent which, in his view, is quite “an extraordinary achievement which makes me proud”. Beyond this, the team entrusted with BharatBenz literally had to discover everything from scratch, which was not the easiest of tasks. For instance, logistics in India and Germany are “two different animals” with the landscape here completely different.

DICV is now on its way to break even and things could only get better from now with the foundation strongly in place. It is quite an achievement, especially in an ecosystem where two Indian brands rule the roost and others are scrambling for a share of the balance.

Additionally, there have been closures like MAN Trucks of Germany, which decided that India was not worth its while. Nesselhauf does not comment on the matter but makes clear that there is a difference in the way DICV works vis-a-vis others.

The company also started out with an ally but figured out that this was not the best of options, especially when it came to flexibility in suppliers. DICV soon became independent, which meant supplier selection was now easier.

“To me, this is important and should not be underestimated because we make our own decision for India…in India. There is no compromise which could become inevitable in a JV and this is something which we did not want,” says Nesselhauf.

The focus was production for India in India, with clear plans for truck and component exports. “People thought it was impossible but we have done it despite all the scepticism,” he adds. Today, it is a robust business model that is in place thanks to the fact that DICV decided to go solo early instead of a partnership.

While the outgoing CEO refuses to be drawn into any discussion on MAN Trucks, he literally bristles when told that the common perception is that Daimler has money to burn in India. After all, reckon market observers, the German parent company has deep pockets and can take the hit.

“I would have been happy if I had money to burn! But this was not the case..no way!” reiterates a visibly irked Nesselhauf. He then reminds you that the company had come in to India during the 2008 financial crisis when the world had literally turned upside down. According to him, DICV stuck to its path and the proof of the pudding is that its vehicles are exported to 40 different countries which “vindicates our global standards”.

For good measure, Nesselhauf makes known that these are not shipments to “some godforsaken countries” but to New Zealand, Mexico, Costa Rica and the like “which shows what BharatBenz is about”. There are four brands shipped out from India (Mitsubishi Fuso, BharatBenz, Mercedes-Benz and Freightliner) which “reflect the highest quality systems and our faith in technology for the export business from Day 1”. By the end of the day, the target for DICV is to reach the global profitability of Daimler.

Trendsetter in customer connect

Back home, the BharatBenz brand association has become strong with tippers and is gradually growing in buses. Nesselhauf also makes no bones about the fact that the brand has had “a lot of impact on competition and customers have a better choice in trucks today”.

He believes that the shift to modern trucks happened thanks to DICV’s efforts and there is no question that it has been the trendsetter in technology and customer connect. ”We are focusing strongly on technology and this is what buyers want,” he adds.

Nesselhauf also maintains that the company is always prepared for changes in regulation which include the latest directive on axle loading. “We anticipate change in regulation and observe trends of the future. For instance, pollution in India can be gauged through apps which show that more cities are choking. This means that there will be more environmental regulations and accidents,” he elaborates.

This means that braking systems need to be better for the future. Likewise, e-commerce is booming and will require certain types of trucks. “You need to anticipate the future even while you will not be 100 per cent right. There are indications in the market which will help you plot your strategy and create options,’ says Nesselhauf.

This includes the next big frontier in Bharat Stage VI emissions which will see significant technology investments and, hence, more expensive trucks. Some manufacturers believe that this could deter fleet operators and will, therefore, see a lot of brisk pre-buying through 2019-20.

Neeselhauf believes that BS VI could throw up surprises as what happened in BS IV which saw sustained buying despite an increase in costs. He says it is important for suppliers not to be afraid of the next technology level because it gives prospects to export more parts globally.

The topic then veers around to India and the tremendous potential it has to unleash on the rest of the world. “For me, it is incredible to see how the country has developed over the last decade. Indians have a tendency to be pessimistic but I see change in terms of infrastructure, IT, airports, hotels and so on,” says Nesselhauf.

In his view, India is more linked to the world than ever before, unlike the past when it was relatively isolated. Yet, there are issues that clearly bother him. “I wish India could use its engineers that it produces every year for India, and not just the rest of the world, to be able to accelerate and shape its future,” he says.

According to Nesselhauf, the country has “such great engineers” whose talent needs to be tapped a lot more optimally. After all, some of these people work successfully for MNCs and could impart their knowledge here too. “We must have the guts to believe in Indian engineering that they can do it,” he emphasises.

Whilst on the subject, Nesselhauf makes clear that he is not a believer in jugaad , the term that has become fashionably associated with India’s expertise with innovative, low-cost solutions. “The point is that you have to come up with technology and functionalities. Jugaad is a shortcut and is finally status quo which does not help you move forward,” he says.

As he puts it, there must be an aspiration to aim higher and not just remain content with achieving something. Likewise, in the case of frugal engineering (which is distinct from jugaad and more or less a form of lean engineering), Nesselhauf says this is fine but what “you want to achieve/design is more important”. The key is to look for the technology and just not remain cost-conscious as an obsession.

In his view, the time has come to kick off the Indian decade where “we are the frontrunners and not the followers”. It could perhaps begin with fixing environmental challenges for the world given its ambitious goal of embracing BS VI barely 18 months from now.

“Everything can be done and people can be motivated. India has to invest in talent to get the speed and change things around. You can make the impossible happen,” says Nesselhauf. He should know, given how DICV pulled out all the stops to make BharatBenz a reality.

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