Maxion Wheels breaks ground on new aluminium wheel plant in India

Maxion Wheels, one of the world’s leading wheel manufacturers for passenger cars, light trucks and commercial vehicles, is setting up an all-new aluminum wheel plant near Pune. The company has earmarked investments to the tune of US$ 50-55 million (Rs 315 crore to Rs 350 crore) to set up the plant and commence operations under the first phase of the upcoming facility.

Under phase one, the upcoming facility is estimated to have an annual manufacturing capacity of up to two million (aluminium) wheels, which, according to top company officials, will suffice requirements until 2022.

While the upcoming facility marks this global wheel giant’s first wholly-owned business unit (called Maxion Wheels Aluminum India) in India, the company has a clearly defined five-year roadmap for securing business (from this plant) in near future.

The new aluminium wheel plant will come up on an 85,000 square metre site near Pune. Under phase one, the plant area will be spread across 25,000 square metres, leaving enough space for future expansion.

According to Pieter Klinkers, CEO, Maxion Wheels (pictured above), the manufacturing capacity of two million units (until 2022) can be easily doubled up to four million units depending on the market demand after the first five years of operations. The company says that the plant will commence production (under phase one) as early as Q3 2019, and will generate employment for more than 500 direct employees and another 500 new jobs for ancillary suppliers.

The company conducted its groundbreaking ceremony at the site on February 19 in the presence of its senior management team, customers and suppliers and other dignitaries. Speaking on its sidelines of the event, Klinkers said, “With our new Pune passenger car aluminium wheel plant, Maxion Wheels becomes the first global light vehicle aluminium wheel producer in the Indian market. We (have) responded to our growing global customers’ requests, and made the investment to join them in the world’s fastest growing economy. When our project is complete, we will produce four million aluminium wheels annually (post-2022).”

The USA-headquartered Maxion Wheels is known for catering to the passenger car, commercial vehicle, agriculture and off-highway segments globally. It rolled out 60 million wheels last year, which included about 45 million steel wheels and 15 million aluminium wheels. Company officials predict an increasing share of aluminium wheels typically driven by the passenger car market globally. This is where the upcoming India plant is understood to contribute to its growing aluminum wheel business globally. The company’s planned aluminium wheel production globally stands at 20 million units by 2020.

India aluminium wheel demand
Speaking to Autocar Professional, Prakash Kodlikeri, MD, Indian operations, Maxion Wheels, said, “We had imported about 300,000 aluminium wheels (for cars) from our European units and supplied to our customers in India last year. This included several costs such as logistics and duties. Additionally, we have secured an order for 400,000 aluminium wheels in India from a single customer. The upcoming facility will be top rated in terms of quality. The processing costs of car and truck (steel) wheels are lowest in our group globally. Similarly, I am targeting lowest processing costs for the new aluminium wheels from our upcoming plant within Maxion globally. It will be a challenge to be the most cost-effective plant manufacturing wise globally for the group.”

Clearly, the company’s order book seems to be fast filling up even as it prepares for local manufacturing of the premium aluminum wheels. “Our RFQs are already exceeding the one-million unit mark as of now,” Kodlikeri candidly revealed to this publication.

Under phase one, the company is gunning for a turnover of about Rs 600 crore by 2021-2022, by when it expects to utilise full capacity of two million units per annum.  

According to Kodlikeri, while at Kalyani Maxion Wheels, the steel as raw material is sourced from suppliers such as Tata Steel, Essar Steel and Jindal Steel, the aluminium for car wheel applications as raw material has no such suppliers. The company, Maxion Wheels Aluminum India in this case, is developing the required grade of aluminium with Vedanta and Hindalco.

“But these are in the stages of development and testing. It typically takes a year or two before it can be commercialised,” he said. The company will source aluminium as raw material from UAE-based Dubal (Dubai Aluminum)

“Dubal has highly sophisticated plants and they supply high-quality raw material to the majority of European companies. Since initially, we cannot take risk because the material is key in this business, we opted to source it from them. So we are establishing them as our standard source. In the meantime, we will try out other sources too,” mentioned Kodlikeri.

Interestingly, according to Klinkers, the cost of raw material of the aluminium wheel is more than the total cost of the steel wheel for automotive applications.

 Volkswagen has been the largest customer for Maxion Wheels’ aluminum wheels in India so far.

Increasing penetration of aluminium wheels
According to Klinkers, the current penetration of aluminium wheels in the passenger car segment is close to 25 percent.

“It used to be almost zero nearly five years ago. So I’d say that the catch up has happened very fast already. I am sure that this will increase further in the time to come. We thought it is a good opportunity and a necessity to serve our customers in this growing market. It is the same customers here as we serve worldwide,” he added.

Aluminium wheels are lightweight (when compared to steel wheels) and offer better styling options to passenger cars. “You will not see steel wheels on most premium vehicles. Aluminium wheels can be seen in almost all segments of passenger cars now. The premium variants typically offer aluminium wheels. Therefore, the demand for these isn’t only restricted to one segment now,” added Klinkers.

Partnership with the Kalyani Group
Maxion Wheels has been present in India for almost 22 years now. It started steel wheel production in India in 1996 under partnership with Pune-based Kalyani Group, which owns approximately 15 percent in the same.

The entity, known as Kalyani Maxion Wheels, has two steel wheel production plants in Pune – one each for passenger cars and commercial vehicle segments. According to the company, while the car wheel plant produces four million wheels annually, the truck wheel plant produces about 1.2 million units yearly.

According to Kodlikeri, the annual turnover of Kalyani Maxion Wheels is expected to cross Rs 540 crore for the ongoing financial year (FY2017-18).