At the opening ceremony held on October 28 at the Autostadt, Volkswagen's museum in Wolfsburg, there was a distinctly Indian atmosphere with 1,600 high-ranking guests from the automotive industry in attendance.
Speaking on the occasion Bernd Osterloh, chairman of the general and company works council of Volkswagen AG said, “Within a few years, the trade fair has developed from a kind of VW in-house event into an internationally acclaimed platform for industry. We are fully aware of the importance of suppliers for the simple reason that an increase in employment has predominantly taken place in this sector.
We are paying close attention to this development as VW itself is a successful supplier. With our in-house component production facilities providing employment for more than 30,000 people in the VW brand alone, we are able to deliver engines, gears and a wide variety of other components to our group. This is why the Volkswagen Group is much more aware of your needs than other automobile manufacturers”.
According to the ambassador of India to Germany, Meera Shankar who spoke via a video link, “the participation of India as a partner country at the IZB will have a sustainable positive impact on business relations in the automotive sector and lead to a win-win situation for both sides”.
Discussing the challenges facing German component companies entering India, Prof. Dr Bernd Wilhelm CEO, Wolfsburg AG, said, “India is not just a low-cost country but its automotive industry has a high level of development. This is why German companies could see increasingly levels of competition. Manufacturers and suppliers who want to be successful in India have to be present in the country and localisation is the key to success.” India takes centre stage India has emerged as one of the significant new markets for global automotive suppliers and was the main focus at IZB 2008. As a result Indian suppliers could take advantage of the show as a communication and networking platform to highlight specific opportunities to leading OEMs from Germany and abroad as well as the international automotive suppliers.
India also took centre stage in the programme of events accompanying the IZB with Indian exhibitors showcasing their product range and services in Hall 2 spread over a large area. According to the organisers, the presence of Indian automotive companies at the IZB broke all records Europe-wide as they claim there is no other automotive show in Europe which attracted as many suppliers from India as the IZB 2008. For many of the Indian exhibitors it was the first time that they participated in an European exhibition. Experts from leading Indian and German OEMs and suppliers met on October 28, one day prior to the first day of the IZB when the ‘Indian-German Automotive Congress’ was held in the Forum AutoVision of Wolfsburg AG.
The IZB also lived up to its reputation as an international platform for automotive suppliers. In addition to Indian companies, exhibitors from 20 nations took part in the show with delegations from the USA and Canada also attending.Previous IZB partner countries were Japan, Italy, Turkey and China. Prominent players from India that took part in the show included Dana India, Apollo Tyres, Anand Automotive Systems, Essar Steel, Kalyani Forge, DK Jain Group – Lumax, Tata AutoComp Systems, Endurance Technologies, LG Balakrishnan & Brothers, Hightemp Furnaces, TVS Group, Roots Industries, Pricol, Sumi Motherson Group and Spring India.
The Indian exhibitors expressed satisfaction over the opportunities they got to showcase their products. Dana Holding Corporation, the US-based company, which is a world leader in the supply of axles, driveshafts and structural, sealing and thermal management products, displayed a number of products being manufactured in India, including rear axles and propeller shafts designed for Tata Motors’ crossover vehicles and pickups. The Anand Group, one of Dana’s joint venture partners, also exhibited its products in the Indian pavilion. According to chief executive officer Gary Convis, Dana had recognised the importance of the Indian market many years ago and the company is well positioned as a supplier to the expanding vehicle manufacturing industry. Dana currently employs around 2,000 people at 12 facilities and technology centres in 10 cities across India. The company along with its partners supplies products to customers like Ashok Leyland, Mahindra & Mahindra and Tata Motors.
Spicer India, which also had a presence at the show, is a majority-interest JV with Anand Automotive Systems and was set up in 1993. The company produces axles, propeller shafts and other related components for cars and light commercial vehicles, both in the domestic and export markets. Dana also has a technical centre at Pune, called the Dana India Technical Centre, which is a world-class drivetrain research and development facility.
Other group companies include Axles India, a minority-interest JV with the TVS Group and Sundaram Finance that was acquired by Dana in the late 1990s. The company makes axle housings which it supplies to Dana for its commercial vehicle axle operations, as well as supplying to various Indian OEMs. Similarly, Dana India is a wholly-owned operation in Pune that manufactures axles for the off-highway market. Victor Reinz India has a JV with the Jayant Group for the manufacture of Victor Reinz sealing products. The facility is expected to begin production of multi-layer steel cylinder head gaskets, secondary gaskets and heat shields for its Indian automotive customers in the first quarter of next year.
Dana displayed products such as Spicer AdvanTEK axles for front and rear applications, which have improved torque density and lower noise, vibration and harshness (NVH) as well as better energy efficiency. Other products displayed included Spicer Life Series propeller shafts for commercial and light vehicles which has a series of prop shafts that have lighter weight components and improved durability and NVH performance. Other products included thermal management products featuring oil coolers and heat exchangers that help improve fuel economy, lower emissions and assist in extending the life of a vehicle’s engine, transmission and cooling system.
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There were positive reactions from other Indian companies as well. K Saravanasundaram, chief operating officer, Roots Industries said, “We are the leading manufacturer of horns in India and the 11th largest in the world. We are pleased with our decision to take part in this fair and have received a good response from visitors. In fact we are already supplying horns to many countries including Germany.” Leading supplier Bosch India displayed a range of products for low-cost cars including fuel management systems, starters, alternators and brakes as well as its new Start-Stop System, which is currently fitted onto micro-hybrid versions of the Mahindra Scorpio and Bolero. Managing director VK Viswanathan was very optimistic about the company’s prospects in India and said it had received strong interest from visitors to the IZB. Other officials present at the stall were NGK Menon, vice-president (OE Sales and Export), Giri Rao, deputy manager (Technical Sales – OE), and Ninan Philip, DGM (Marketing- OE Sales Automotive Products). Meanwhile, J Sivakumar, senior deputy manager, Market Development and Customer Development, Pricol Ltd, said: “Overall, we have got a good response from visitors and already have a representative office in Germany. The reason for taking part in this fair is to expand our footprint in the European market and we are happy about the outcome.” According to Graham Wilson, president, Corporate Business Development, Hightemp Furnaces, “We are the single largest commercial heat treatment company in India. Our customers include Suzuki, Dana Spicer, Lucas, GKN, Denso, SKF, Timken and Honda to name a few. We have a JV with Dowa Mining Ltd, Japan, and service automotive companies worldwide. We have supplied heat treatment furnaces to a leading truck manufacturer in India and have a strong order book at present. We are looking forward to establishing long term business relationships with German automotive OEMs and have received a tremendous response at the IZB.” Striking an upbeat note, K Karthik, senior manager (exports), LG Balakrishnan & Bros Ltd said, “We already have strong exports and came here to build our brand in Europe. We are pleased that India is the partner country for IZB this year and have got visitors from all over Europe and Asia.” Discussing the response at the IZB, Khursheed Aga, director, Gold Seal – Saargummi India,said: “Our company Gold Seal has a joint venture with German company, Saargummi. We manufacture sophisticated rubber weather stripping profiles and supply to Indian OEs including Ford India, GM, Mahindra and Tata Motors. Through our partner, we also supply to most of the German OEs. At the fair we got an opportunity to meet the various OEs, as well as many Indian companies and plan to foster new business relationships with them.”
An India Day with the theme ‘Europe goes India’ was held on October 31, the last day of the IZB. The Indian ambassador to Germany, Meera Shankar, who was the chief guest at the event, said that the automotive sector had emerged as a sunrise sector in the Indian economy. She also appealed to German automakers to look at India as a long term partner. Discussing the growth in the Indian automotive market, Sandeep Balooja, senior director - business development, Anand Automotive Systems, said the growing Indian middle class will drive the growth of the automotive sector. “We are looking at about seven to eight percent growth this year and by 2014, we expect car sales will touch three million units per annum.” The main event was a panel discussion which was attended by the experts from the automotive industry in India and Germany. They included Mahesh Kodumudi, executive director, corporate purchasing, Volkswagen India, Vishnu Mathur, executive director, ACMA, Dilip Chenoy, director-general, SIAM, Robert Houston, CEO, C Rob Hammerstein, and Karsten Bogun, managing director, Skoda India. The big question that emerged at the panel discussion was where the Indian automotive industry was headed in the future and what opportunities it offered to German and Indian companies. Opening the panel discussion moderator Jason Stein, publisher, Automotive News Europe said “When we look at the global automotive markets, India comes in the forefront. It is an appropriate time today for European automotive companies to go into India which is presenting lot of opportunities.” Kodumudi said Volkswagen has very ambitious plans for its Indian operation including the setting up a new facility in Chakan, and sourcing of components. He said the Indian supply base has matured well over the years and would improve further. He confirmed that VW is working very closely with its Indian suppliers and is looking at developing a long term mutually beneficial relationship with them. “We are coming to India with an open mind and are not bringing all our German or European suppliers to India. We have opened the doors to Indian suppliers, who have an equal footing with our existing supplier base. This offers tremendous potential for Indian suppliers to enter the world of Volkswagen. Today, we make over six million vehicles annually and we want that to go up in the next 10 years to 10 million vehicles”. Kodumudi saw significant gaps in the innovativeness of Indian suppliers and urged them to believe in themselves and gear up to innovate, invest in R&D and compete on all levels with global standards. In return he said Volkswagen would bring brand new technology and products to the country. Talking about the challenges facing VW in India he said, “If costs have to come down, the infrastructure has to be improved. This is also going to contribute tremendously in bringing down the total cost in the value chain. Currently, we are not in a big purchasing phase but we anticipate big problems. That is why we are encouraging all our suppliers to come closer to our factory in Chakan.” Volkswagen has very ambitious of sourcing auto components from India. Kodumudi said, “We have set up a regional sourcing office in India and will actively look at suppliers with export potential and promote export of automotive parts and components outside of India. Many of the suppliers can take advantage of our scale and supply to our Polo not just in India but also in Russia, China and South Africa. In fact many suppliers have already been awarded business in India and will export to the platform across the world.” Meanwhile, Karsten Bogun said infrastructure is a big challenge for Skoda in India. "Distribution of cars from our plant to dealers across India is a big challenge and we are hoping that the talks between SIAM and the Indian Railways will result in a system for the transportation of finished cars by rail,” he said. Vishnu Mathur said, “Volkswagen has already appointed suppliers for its global supply chain and this is a great opportunity for them and we at ACMA support this development. In terms of innovation, I agree that this was not a strong point among the Indian suppliers. But that capability is coming up very rapidly in the Indian supplier industry.” Talking about ACMA initiatives, Mathur said, “We are training companies in the processes of product development, and how to work together with OEs to do joint development of products.”
Talking about labour costs in India, Dilip Chenoy said that when companies bring in their European suppliers into India they run the risk of replicating high cost structures within the country. Instead he urged the manufacturers to focus on developing local vendors that add value and help to lower costs. He said that several new automotive plants are being set up in Chakan including the new Volkswagen, Bajaj-Renault and General Motors manufacturing plants which would have a cumulative annual manufacturing capacity of 750,000 units per annum. However, this area has a very limited road infrastructure. As a result, SIAM is actively talking with the Indian Railways to see how they can get a railway line into the area to facilitate the efficient movement of components and cars.
Overall, as expected for the Indian suppliers present at the IZB, the event turned out to be an international platform with good networking opportunities available, helping them establish business links with representatives from Volkswagen AG, suppliers from Germany and abroad as well as other automobile manufacturers.