Global automotive supplier Mahle is bullish on India as it gears up to snap up new business opportunities arising out of incoming BS VI norms and the tech evolution in the form of downsizing and lightweighting. R Sundararajan, president, Mahle Holding India, reveals the game-plan to Amit Panday.
Can you give an outlook of the evolving Indian auto industry and where do the opportunities lie for the Mahle Group in India?
The Indian automotive industry is poised for a quantum leap, both in terms of volumes and technology in the coming years. Given the projected GDP growth of 7.5 percent per annum for the next five years and favourable government policies, India will emerge as the third largest vehicle producer in the world by 2020. The key technological changes would be:
l Emissions: India will implement BS VI emission norms by 2020.
l Downsizing and lightweighting: Usage of alternate materials.
l Electrification and hybridisation: These will begin to show up in metros. Mahle has a lot of experience in developing these technologies for global OEMs. All these present a great opportunity for Mahle to introduce these new technologies at affordable prices for Indian customers.
While Mahle is a leading supplier of engine components to OEMs in India, where does it stand in terms of the market share across various product lines?
Mahle is recognised worldwide as a leading supplier of engine components and has a strong presence in India. Apart from this, we have a significant presence in filtration products — air, liquid and fuel — especially in the LV segment.
Our recent offerings of plastic cylinder head cover and air intake modules have resulted in substantial weight reduction and NVH improvements. We have further strengthened our position as an HVAC and engine cooling systems supplier with the recent global acquisition of the Delphi thermal business including India. We have commenced commercial production of starter motors and alternators and we see huge opportunities in the coming years for Mahle to emerge as a significant player in this segment.
Passenger cars segment in India accounts for 67% of the business, followed by Medium and heavy duty segment which constitutes 9%. MAHLE is also a major player in the aftermarket business with an extensive dealer network nationwide – this accounts for 17% of the total sales in India ,while exports constitutes 3% of the sales and the rest in non-automotive business
With BS VI coming in, will Mahle explore making India its global or regional manufacturing hub for engine and crucial components?
The government of India has announced implementation of BS VI emission norms in 2020. This has thrown up a lot of challenges, especially for Indian OEMs as they need to review their complete engine architecture and evaluate the technical feasibility and the impending costs of upgrading existing platforms. Mahle teams are working very closely with OEMs to provide a complete basket of products as a system supplier. India is identified to be a major export hub for certain car models globally and this will provide both a direct and indirect opportunity for Mahle to provide products for export from India.
Mahle believes in establishing its manufacturing footprint close to the customer in the countries where they set up their plants. Currently, exports from India constitute a small percentage of our current sales. We are exploring areas where Mahle can be globally competitive out of India.
How much has the company invested in India so far and how much does it plan to further invest in its Indian operations?
Mahle has invested Rs 465 crore and we estimate another Rs 475 crore investment in the next five years to meet future demand.
What are the new product lines that Mahle plans to introduce in its Indian operations?
We are gearing up to meet the new technological challenges by way of tighter emissions, lightweighting and improved fuel efficiency through a whole range of new products. These could be lightweight pistons with special skirt coatings, assembled camshafts, plastic cylinder head covers, air indirect charge air coolers, intake systems, oil mist separators and EGR coolers, to name a few. These are already established in terms of manufacture locally or in the process of getting established shortly. Another area which offers great opportunity is the mechatronics division where we plan to offer starter motors, alternators and electric drives to Indian customers.
Mahle’s global annual report 2015 has it that India is driving growth in APAC, followed by China. How would you compare the company’s businesses in India and China?
China is the largest automotive market in the world accounting for more than 50 percent of the production. Mahle has made major investments in China on all its product lines to cater to European OEMs as well as the local Chinese companies.
Mahle has a full-fledged Tech Center based in Shanghai to support customers in China. The recent slowdown in China has turned the focus on India as the next growth area as it is projected to grow faster than China in the coming years. Our experience in China in the past decade should help us establish a similar growth model suitable for OEMs in India, provided the Indian market lives up to its growth projections in the next five years.
How would you define the USP of Mahle products and technologies versus the competition in India?
Mahle offers complete system solutions drawing on its long technical expertise. It is able to provide a more holistic approach to problems drawing on resources from various fields like engine technology, vehicle technology and other emerging areas such as mechatronics.
With increased localisation and manufacturing in India, Mahle will have to depend on a large base of Tier 2 suppliers. What is your opinion about the Tier 2 supplier base in terms of their manufacturing and R&D capabilities, quality practices, investment abilities and being future-ready?
This indeed is a major challenge for all major auto component manufacturers in India — we have a very robust and established program of identification, development and establishment of a consistent quality system with Tier 2 vendors. Still, there are challenges due to quality, capacity and other financial and technical capabilities of the vendors. We are in constant engagement with Tier 2 vendors to ensure continuous quality upgradation and carry out risk assessment audits to ensure that this does not hamper our end product to the customer.
What is the role of the technology centres based in India? Do they also pursue development for global projects?
Mahle believes in the need for developing technical expertise locally with local teams which can understand India-specific requirements. Towards this, each of the entities has built their own technical teams who have been trained and developed in Mahle’s global tech centres.
Recognising the technical capabilities and the cost advantage of Indian engineers, Mahle set up its engineering services division in Pune which undertakes design and development activities exclusively for thermal products for global OEMs. What was initially conceived as a low cost off-shoring activity is now expanded to a value added high technology role over the last 10 years. Based on this experience, Mahle is exploring avenues to establish a similar technical centre for all other business divisions out of India.