Make in India becomes a global mantra

A sharper focus on achieving high quality production, increasing localisation levels and getting into export mode has seen some carmakers make India a hub for manufacturing their global cars.

Shobha Mathur By Shobha Mathur calendar 13 Jan 2016 Views icon17572 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

The Indian automotive industry is finally coming of age. Premier Automobiles with its Fiat and Hindustan Motors with its Ambassador, which for long had  dominated the passenger car industry, saw the rug being pulled from under their feet when the  MarutiUdyog story unfolded in 1983. At the time, global models were few and scattered, marked mostly by the snazzy Impalas, Chevrolets and the Mercedes-Benz luxury sedans which were imported into India. And words like quality and localisation were still novel terms. MarutiUdyog was instrumental in starting a new era in the Indian automobile sector, ushering in quality manufacturing practices as well as the people's car.

However, initial teething problems were wide and varied as the component supplier base was largely undeveloped. Neither did it possess the technology nor the expertise to meet international quality standards of the foreign carmakers setting up base on Indian soil. As the OE makers handheld the supplier fraternity in India, it grew in stature, piggybacking on joint ventures and technology partnerships with foreign entities. Thus began the learning curve as advanced technology was transferred to local hands and Japanese quality practices, especially total quality management (TQM) and total productive maintenance (TPM), became a norm to be adhered to stringently on the shopfloor of both vehicle manufacturers and suppliers.  

What also helped was that a clutch of passenger car models, initially from the Maruti stable, began to be exported. This exercise was slowly emulated by others with Hyundai Motor India catapulting to being the top car exporter and continuing to hold fort till date.

To its credit the passenger car industry had begun reaping the benefits of drawing on a low cost base, locally skilled technical manpower which was directly linked to a higher productivity performance and a speedily evolving quality graph for tapping global opportunities. In 2002, the ACMA Centre for Technology (ACT) had been formed for inculcating the best practices of Japanese and global manufacturing to Indian component suppliers through a cluster approach. The tryst for turning global had truly begun.
Let’s fast-forward to 2015.

MISSION MAKE IN INDIA

The year 2015 saw multiple global launches in India including Ford India’s Figo Aspire and Endeavour SUV, Hyundai’s global Creta SUV, Maruti Suzuki’s Baleno premium hatchback and the Renault Kwid hatchback to name a few. While the Figo Aspire will be exported to global markets, the Creta will be shipped to Latam, Africa, South East Asia and the Middle East while the Kwid will be heading to Brazil for a start. 

What has made the journey for Maruti Suzuki India special is that its global hatchback, the Baleno will be exported to its parent Suzuki Motor Corporation of Japan and subsequently to a targeted 100 markets.

Recently Shinzo Abe, prime minister of Japan, on his visit to India underlined this fact saying that Suzuki Japan will be importing cars from Maruti Suzuki for the first time, pushing the Indian government’s 'Make in India' programme even in Japan.

Till date Maruti’s exports have been mainly to markets in the Middle East, Africa, South Asia and Europe. The litmus test for the Baleno now will be its acceptance in the Japanese market as a Made-in-India product. Once exports commence in early 2016, the next highlight will be on exporting locally developed technologies to Suzuki. Till now the local subsidiary has been sourcing technologies from Suzuki and customising them for India with the help of the local engineering and design team or working in sync.

By 2020, India is slated to be the No. 3 in overall global rankings in automobiles, offering huge growth potential to OE manufacturers.  Here’s taking a closer look at some vehicle manufacturers and component suppliers who can make that happen.

Maruti Suzuki leads the way

In the 1980s, Maruti Suzuki India's managing director R C Bhargava was very keen to benchmark product quality. He felt the models rolling off the assembly lines should also be exported.

The first people’s car – the Maruti 800 – was shipped to Bangladesh, Malta, Hungary and Europe. But it was the Zen that became the first global car to be made in India when it was launched in 1993 and subsequently shipped to Europe as the Alto the following year. In 2007, the A-star headed to foreign markets with India being the sole production base for this global model at the time. In fact, it was the Zen which kicked off the trend of introducing global models leveraging one design worldwide. In a further progression, Suzuki started making global products based on a single design at multiple locations, some examples being the Swift, Ritz, SX4 and the A-star.

baleno

CV Raman, executive director of engineering, Maruti Suzuki India, told Autocar Professional that it does not matter whether the car is a global model or a regular one since it is more about exporting from India to the world. He attributes this progression to the company’s focus on people’s practices, maintaining international quality standards, best manufacturing processes built into the plant, as well as suppliers coming of age and evolving according to the requirements of the product quality. This quality is now accepted in developed countries as well.

For Maruti Suzuki, the graduation from the Maruti 800 (which initially had low 20-30 percent localisation with volumes also being low) to the Zen marked a transformation at both the company and suppliers’ end. Taking a cue from Maruti, many of its key suppliers inked technical tie-ups and collaborations with Japanese counterparts. Today they have the wherewithal to support OEMs in global manufacturing.

However, the journey of product indigenisation was an uphill task as the carmaker recognised that it was necessary to keep suppliers in the loop right from the product concept stage, especially in the case of a lamp maker since lighting is the first product to be styled in a car.

The outcome is that today the new Baleno sports a very high local content of 98 percent with just 1 or 2 percent of the electronics yet to be indigenised. The premium hatchback currently enjoys a booking order of 44,000 units with a waiting of 3-4 months at the premium Nexa outlets where the S-Cross is also housed.

Hyundai Creta: A Game-Changer

Piggyback riding on the local sales of the global Creta SUV, which was launched first in India, Hyundai is looking at garnering double-digit growth of around 16.7 percent in the domestic market this calendar year with the sales forecast at around 470,000 units compared to 411,000 units in CY2014. Though the initial focus is the domestic market, HMIL has already exported 3,500 Cretas in the last couple of months. The SUV has received about 71,000 bookings and has a three-month waiting period since it was launched five months ago.

In 2014, Hyundai exported 201,000 cars but feels that reaching this figure in 2015 may pose a challenge due to the slowdown prevailing worldwide. The country’s second largest carmaker has been exporting most of its global models encompassing the Accent, i20, Elite i20, Grand i10 and Eon.

“At Hyundai Motor India, we have a full line-up of Make in India products, made for the world,” says Y K Koo, MD and CEO. The Korean carmaker has been exporting to 85 countries from its Chennai manufacturing facility, benchmarking quality standards for customers globally. With an investment of over $2.7 billion in India, Koo feels that India has the potential to become the global automotive manufacturing hub in the future.

yk-koo

Since it started operations in India in the mid-1990s, Hyundai has designed and developed products specifically for the Indian customer. “The majority of our products have localisation levels of over 90 percent with each new product attracting an investment of about Rs 1,000 crore,” elaborates Koo. The carmaker has, till date, exported over two million cars pushed by strong demand in the non-European markets while its Turkey plant caters to Europe.

Hyundai India has a strong supplier base situated in close proximity to its plant at Sriperumbudur with the majority also servicing the needs of the Hyundai Motor Group in Korea. These work on the process and product development from the blueprint stage to its completion in line with the carmaker’s quality processes.

The change in consumer preferences and market dynamics towards premium products along with an increase in the number of first-time buyers has driven India’s global potential, says Koo. “Developing on it, Hyundai has modelled its global modern-premium brand direction in India, understanding the need of the increasingly aspirational Indian customer.”

A creative quality management system based on high efficiency is the cornerstone of the company's quality programme. This model is exclusive to the carmaker whereby it maintains quality control as per global standards with quality and productivity being simultaneous functions. Hyundai, along with a daily process-based quality check, holds vendor incentive trips, dealer incentive trips and vendor meetings to work more proactively on a platform of synergy, quality benchmarks and global management direction.

Koo says that customers demanding global models, whether in India or worldwide, give priority to styling (Fluidic sculpture 2.0), infotainment features and safety. Requirements are, however, divergent in terms of interior styling, power and transmissions which vary on the country-specific scale of importance.

“By 2020, as the largest exporter and the second largest car manufacturer (in India), we will continue to maintain our leadership in exports and focus on the domestic market,” he concludes.

Collaborative approach with suppliers pays off for Toyota

toyota

By 2020, Toyota plans to bring more global products to India to alleviate the basic issues related to the environment, energy and safety in expectation of India becoming the world’s third-largest market with annual sales of five million cars.

Toyota Kirloskar Motor has been working on increasing localisation and makes petrol engines and transmissions locally in Bangalore. “In case of the Etios series, the localisation level is pegged at 70 percent with the average localisation of our other models being around 50 percent. The more we indigenise, the more we reach economies of scale. The challenge is developing critical mass for vendors as suppliers need to have a larger base to be competitive. This is a function of part availability for the global market. This can be fostered only when the same models are made globally with the same specs,” says N Raja, director and senior VP, sales and marketing. Toyota Kirloskar Auto Parts exports C-type manual transmissions for the manufacture of the Etios in Brazil and Indonesia.

The Japanese carmaker maintains a collaborative approach with its suppliers sharing the Toyota Production System (TPS) with them. The Toyota Supplier Support Centre (TSSC) was formed in response to an increased interest in TPS. TSSC works with companies outside of Toyota who have an interest in TPS by creating a learning method based on trying, reflecting and continuing Toyota’s contribution to society. Under this approach, supplier partners adopt the carmaker's best practices to maximise efficiency. Managing costs without dimming quality is one of the main challenges in maintaining international quality standards. Parts localisation is a function of skill availability at the vendor’s end but it has not been too much of a concern as most of the suppliers are partners to international brands including those who export components to other countries.

Nissan's strategic approach

Nissan sees India as a strategic market and has set up both a manufacturing and R&D footprint that will support it in becoming one of India’s biggest car exporters. While exports help in optimal utilisation of manufacturing capacity, they also catapult to the forefront global acceptance of Indian production quality standards and expand the scope for widening the export base for India-built cars. “The Micra, for instance, was ranked highest in the J.D. Power Asia Pacific 2014 India Vehicle Dependability Study (VDS). The Datsun Go, which is developed and manufactured in India, is an example of a Made in India and Made by India product,” says Guillaume Sicard, president – Nissan India Operations.

datsun-go

Giving a thumbs-up to the government’s Make in India initiative, Nissan maintains that automobile manufacturers are utilising India’s capabilities more than others. Today, India is among the top 20 exporters in the world and second in the BRICS.

For the Japanese carmaker, the Micra led the pack in terms of exports in 2014-15  with overall export figures between the Nissan and Datsun brands mustering up the 500,000 mark in April 2015 from inception.

Further, the Renault Nissan Technology and Business Centre India at Chennai has contributed significantly towards indigenisation support for various models with the localisation at over 90 percent across the board. Technological development at the carmaker’s end is driven by evolving demands in the core areas of fuel efficiency, reduction of emissions, safety and durability, cost optimisation and innovative features. Investing in design and development in India has seen advantages like adopting international technologies for enabling more entry level vehicle development as well as higher upstream development and localisation.

“We adopt Nissan’s monozukuri production processes that it developed in its Oppama, Japan and Sunderland, UK facilities. In addition, Renault’s expertise in vehicle engineering, information systems, styling and powertrain development, including development of the industry’s benchmark clean-diesel K9K engine have contributed towards development of superior product quality,” adds Sicard. Several standard global processes and trainings further sustain this quality blitz.

The carmaker has already outlined its vision of garnering a 5 percent market share by 2020 and becoming a major player in the local market. It currently holds a market share of 0.91 percent in passenger cars and 1.43 percent in the passenger vehicle segment (as per SIAM data for FY2016).

For Nissan, India’s strong domestic small car market provides the ideal platform for capitalising in similar markets in other geographies. The Renault Nissan Alliance views it as critical to have a low-cost business model that could spin off a limited number of body types from one platform. In line with this thinking, the Renault Nissan CMF-A platform recently delivered the first product – the Renault Kwid. The Japanese carmaker is tapping India’s low cost base to innovate new products and platforms. The Datsun Go hatchback has been designed, developed and manufactured in India for India. The CMF A - Common Module Family platform has been developed by the Renault-Nissan R&D centre.

For the future, working with suppliers in trimming costs, improving efficiencies and productivity, so that doing business in India becomes easier will be the  growth driver.

Renault's new Kwid on the block

The highlight of 2015 has been the Kwid, which marks Renault’s entry into the popular and hotly contested entry-level hatchback segment. A global model, it was launched first in India in September. Unlike its peers, the Kwid is a unique package – an SUV-like design coupled with a 180mm ground clearance. It has struck all the right notes with the Indian car buyer and already has bookings of over 70,000 with the waiting period spiralling to as high as 10 months. The Kwid will also be exported, starting next year, to Brazil and later to Africa.

kwid

Pitched as a game-changer, it comes with aggressive pricing and a claimed cost of maintenance that is 19 percent lower than the market leader Maruti Alto in the A segment. This has been made possible by the extremely high localisation content at 98 percent. With the 480,000 units capacity at the Oragadam plant, the Renault-Nissan Alliance is set to roll out more new world cars from the CMF-A platform.

UNO Minda banks on its quality

uno-minda

This Tier 1 supplier straddles multiple initiatives for meeting global quality standards of OEMs, one of which revolves around a validation process that improves products and processes. A systematic method has been evolved to capture future market trends and these have been aligned to the R&D centre to factor in the changes for future needs. A training and coaching culture for skilling manpower buttresses the first-time-right-job method, while a benchmarking system in R&D, design and process engineering for varied products, design by theory and generating the technical knowhow and standards from existing failures and incorporating them in new designs to make the product more robust are followed here.

“We are proprietary product suppliers, so no inputs are received from OEMs as such but some extra validation requirements have come through Honda global,” says Vikas Bajaj, president – two-wheeler switch marketing and international business head. “Smaller packages are ongoing in design requests by customers and at times it becomes a challenge. However, we continuously work on such designs and thoroughly validate them. Further quality upgradation is done through help of our Japanese consultants.”

No new joint ventures are being considered by UNO Minda for growing its two-wheeler, three-wheeler and off-road switch business with the thrust being on bridging technological gaps by inking partnerships with educational institutions and technology experts supported with customer inputs.

Sona Group: TQM and TPM

Sona Koyo Steering Systems has been practicing the Japanese Toyota Production System, Total Quality Management (TQM), and Total Productive Maintenance (TPM) systems to be globally competitive.

It imbibed TPS from its partners in the early 1990s, and has been following it since then. In 1998, due to an initiative from Maruti Suzuki, it became a member of the cluster that was formed to learn TQM from Prof.Tsuda. TQM strengthened the overall management of the organisation. To further boost the improvement activities on the shopfloor, Sona Koyo embraced TPM, subsequently winning the Deming Prize. It was later conferred the TPM Excellence Award.

The objective, however, was to create a culture of continuous improvements involving all members of the company. For this, employees are first trained, skilled and then empowered to take their own decisions. This approach results in a large number of improvement ideas carried out by frontline associates who ensure sustained results in safety, quality, delivery, and cost.

“We ensure that defective parts are not produced in the first place and, if produced, such parts are not delivered to the customer through our stringent quality-gate system. Yet, in an environment where customers continuously want improved products, the need to upgrade the product technology is imperative. We are working for lightweighting our products so that the OEMs can offer vehicles with higher fuel efficiencies and lower emissions,” elaborates Kiran Deshmukh, executive vice-chairman, Sona Koyo Steering Systems.

With customers demanding zero-defect products, Sona is associated with the OEMs right from the time when the product is at the drawing board stage. Over 80 percent of the product cost and its performance depends on the design. Several design tools such as QFD, DFMEA, as well as virtual analytical and simulation tools are used to ensure robustness of designs. Sona Koyo uses the system of Twenty Quality Gates (QG-20) that focuses on every small detail in the process of development of new products. The concept of front loading is also adapted to resolve all issues before the product launch. Once mass production kicks in, defective parts are a complete no-no.

Meanwhile, the manual steering column and manual steering gear that Sona Koyo produces contains a localisation level of above 98 percent. Local content in more advanced products such as hydraulic power steering is also pegged at above 86 percent. “We still need to increase local content in the electric power steering system where several electronic components are imported because they are not manufactured in India. We have taken several steps to localise these parts either by bringing foreign component suppliers to India or developing local competency for manufacturing the imported component,” adds Deshmukh.

Lumax Industries: Practicising TPM across all its India plants

At automotive lighting manufacturer Lumax Industries, various initiatives have been taken to strengthen internal processes for achieving sustainable quality performance across its products and processes. This involves implementation of the TPM practice across all manufacturing locations across India in a phased manner. Two plants of Lumax have even won the JIPM -TPM award.

“The company engages with OEMs right from the early design stage with the idea of getting it right first time. To facilitate this, we have opened a design studio. Other initiatives include setting up of quality control circles to involve all our operating members in quality improvement activities. In addition, continuous internal training of our staff with internal and external resources are some of the quality improvement initiatives being undertaken at Lumax,” says Deepak Jain, managing director. As part of the initiatives, a training school — called Gurukul  — for spreading the learning culture has been set up at Bawal.

The company has also been upgrading its Tier 2 suppliers and strengthening their supplier quality assurance function.

With the current trend moving towards adapting more advanced technologies, OEMs have signaled the need to adapt LEDs as the light source for upcoming models. While Lumax is gearing up for it, it is meeting the technical requirements for electronics in its manufacturing facilities. The chief criteria for judging quality of a product is based on safety, function and aesthetics.

“Over the past few years, we have worked closely with OEMs to create a common understanding on the quality expectations of final products.  This includes process capability, 4M monitoring, sustainability  and awareness of each operator on quality parameters,” elaborates Jain. 

During this period, many components which were earlier imported have been localised. According to Jain, globalisation is the key to strategise localisation. “Today we may not have technology constraints in localisation; however, from the cost point it may not be a feasible option to localise all the imported items.”

Going forward, the share of electronic components which is rising in lamps may provide a large scope for localisation. The company is in talks with its suppliers to make their solutions locally available at an affordable cost.

Lighting solutions are offered to OEMs based on their styling and technical requirements. OEMs in India are looking for value propositions to compete in the Indian market. For the future, Jain agrees that foreign partnerships will be required for accessing global technology and bridging the gaps in meeting customer requirements. 

On the other hand, most OEMs are scouting for suppliers who have global partners that will enable them to compete globally.

At present, Lumax has a strong joint venture partner in Stanley Electric Company of Japan for the last 30 years. 

Rane Group: TQM everywhere

After Maruti Suzuki set up base in India and charted its success story, a slew of global OEMs followed with their manufacturing footprint. This led to the permeation of international standards, both in product and process quality, for suppliers. In addition to meeting OEM standards, the adoption of the Japanese 
TQM practice set the bar for maintaining high quality among vendors. Rane Group companies were among those who benefited from this stringent quality practice practiced on the shopfloor.

“All products we make are safety critical and hence quality requirements are stringent. At the customer end, our quality levels are very high. But we are still working on reducing internal rejections in some of our manufacturing locations,” remarks L Ganesh, chairman.

For ensuring component quality as well as of the end vehicle, new product development becomes critical. Equal attention has to be paid towards selection of equipment (machines, tooling) and preparation of robust processes on the shopfloor. Especially important is the development of reliable high quality vendors  for assemblies or systems. Most mechanical parts at Rane are localised from the start or within a 12- to 18-month timespan. However, some electronic and highly specialised components continue to be imported. Given the competitive environment and need to hedge against currency risk, OEMs encourage aggressive localisation.

All in all, it can be said that the Indian  automotive industry is transiting to an era when the country will be looked upto as the Big Brother in technology and quality. It has already made its name in frugal engineering, software, its vast 
pool of talent and capability, and its own humongous market size. It is unlikely that any major automaker would not want to be part of 
the India growth story. Today, several  foreign OEMs as well as component suppliers manufacture in India and also ship their products overseas. Furthermore, given that Indian quality today meets or even surpasses global standards, a number of foreign OEMs have their international purchase offices export large quantities of auto components to their global plants. Make in India is today truly a movement. 

INTERVIEW C V RAMAN, EXECUTIVE DIRECTOR — ENGINEERING, MARUTI SUZUKI INDIA

What have been the learnings of this evolution? In which area does Maruti have to further hone its skills?

It is a step-by-step process which is maturing — it involves our understanding and integration of the suppliers systems into the vehicle, evaluating and understanding the market requirements and then putting it back into the product development cycle. Maruti will now be moving to the next step with the completion of its R&D and test centre at Rohtak. Work is underway and we will be able to evaluate all products which we develop here. With that, our capability for validation will go up and we can further develop our capability for designing.

What initiatives have you taken towards maintaining international quality levels while increasing localisation? How tough was it and what challenges did you face?

It was very difficult. Challenges are scale, investment, cost competitiveness and availability of technology. In the late 1980s and early 1990s, manufacturers did not know much about India and did not want to invest in India but today the situation has changed. In the early 1980s, no one wanted to supply to Maruti as they did not know Maruti; everyone knew Premier Automobiles, Hindustan Motors and Bajaj Auto. People used to laugh at us when we used to say we will make 40,000 cars. We had to establish our processes in production, productivity, quality, application with a lot of handholding of suppliers. It was an uphill task. 

cv-raman

A supply chain has to be efficient, cost competitive and of the right quality to be competitive. The same production and processes are maintained for meeting international quality levels though additional features may be added in the end product.

Where do you visualise Maruti Suzuki by 2020 in terms of global products and growth plans?

We want to be a major player as far as exports are concerned with a good presence in the Middle East, Africa and Latin America. We have been able to establish the quality levels for these markets and with the export of the Baleno we will get the Japanese acceptance of our quality as well.

What features are customers looking for in global models both in India and internationally and how divergent are their requirements?

Nothing different. They also look for quality, performance, good design, comfort and convenience but features like an automatic braking or autonomous emergency braking system are elements that are relevant for Europe and not for India. So these new technologies have been put on the export vehicles.

What are the current shortcomings in terms of meeting global quality requirements and what more has to be done in this area so as to reach 100 percent localisation?

I don’t think there is any shortcoming as such. At present we have fragmented Tier 2 suppliers. Tier 1 suppliers are very good and they require a lot of support from Tier 2s and Tier 3s; so the key challenge is to upgrade the level of Tier 2s and get good raw material. Then there will not be any issues of quality.

INTERVIEW N RAJA, DIRECTOR & SVP (MARKETING & SALES), TOYOTA KIRLOSKAR MOTOR

Do you agree that India has come of age as carmakers are increasingly launching global models in India?

Ranked as the sixth largest automobile market, behind China, the US, Japan, Brazil and Germany, Indian consumers have become more knowledgeable about new car models. They are now more keen on enhanced safety features, fuel efficiency, alternative fuel, comfort as well as luxury, rather than focusing just on the price, even though price pays a very important role. Customers are making a conscious effort in understanding the quality of these products in depth. This gradual change is encouraging more global carmakers to introduce global products in the Indian car market as well as come to India and expand their base. We feel that this is going to be the trend going forward.

What has contributed towards India evolving as a global hub for Make in India cars? What has been the contribution of suppliers in meeting international quality standards for components and how closely has the OEM-supplier relationship worked for you?

Most of the global carmakers have increased their localisation levels in manufacturing. This is due to the fact that the technical know-how is excellent in India. We have a lot of skilled labourers, who come at an affordable cost in comparison with many other countries. We have incomparable engineering skills at an economical cost. Given India’s advantages, there is no doubt the country is emerging as an export hub for such vehicles.

n-raja

Over and above this, suppliers in India meet international quality standards which can be attributed to many factors including the growing size of the market and globalisation of norms (at par with international norms).

What have been the learnings of this evolution? In which area do you as an OEM have to further hone your skills?

There is huge scope of improvement when it comes to infrastructure which we believe industries should take up as their key role to further sharpen their skills. The Bidadi Industries Association (BIA) has come up very strongly as an association to bring infrastructural developments not only in their individual areas of work but also bring in change in areas outside their work premises. The objective here is to create a model eco system for sustainable growth of business. 

INTERVIEW L GANESH, CHAIRMAN, RANE GROUP

l-ganesh-rane-group

Compared to global suppliers where do you stand in terms of quality, cost competitiveness and localisation?

The standards are common.  Global suppliers, joint ventures and Indian suppliers are generally forced to adopt common standards and become competitive. OEMs ensure this.

Will you require foreign technology partnerships, JVs or any other alliance to bridge the current gaps and shortcomings?

In certain products it is required. The lack of scale has already made it impractical for Indian companies to develop technologies to meet global requirements in some high technology products. Even where technology does not warrant, sometimes close loyalty (Keiritsu) of Japanese and Korean OEMs make them encourage suppliers from their home country.

Do you think overseas suppliers in India are in a better position to steal a march over Indian component makers in terms of quality?

It is technology that makes the difference. While there is a lot one can learn on quality from global suppliers, Indian vendors are catching up. But technology and global support to OEMs differentiates and creates an advantage for them.

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