ZF’s Construction Equipment Strategy Reveals How India Has Moved Beyond the Auto Market

When a German engineering giant bets €20 million (approximately Rs 192 crore) on a factory in Coimbatore, Tamil Nadu, the location matters less than the message.  ZF Group's new transmission and axle plant, opened this June, signaled something strategic is at work.  One of the world's largest automotive suppliers now believes India's growth in coming years may see an accelerated growth in the construction equipment industry, even as the automotive sector in general moves at a slower pace or remains static.

The timing is awkward for the broader automotive industry. Indian vehicle sales have flatlined in recent years, vehicle makers are cautious, and global automakers are retreating. Yet ZF's leadership sees the construction equipment sector as an anomaly, a segment that, despite its current sluggishness, will double in size over the next five years while the rest of the motor industry moves at a slower pace.

Akash Passey, President of ZF Group India & Head of Region India, remarked, "So that 100% plus growth is going to come in this industry." He spoke on the sidelines of Excon 2025, South Asia's largest event on the construction equipment industry, which was held recently in Bengaluru. "From that point of view, this is a very good time to be here in India." Passey continued. 

This sentiment, spoken at an industry gathering, reflects a broader reorientation. ZF is not abandoning automotive, far from it. But the company is hedging its bets by doubling down on segments where growth is plausible.

ZF competes with the likes of Bosch, Schaeffler Group, Dana, and others in the construction equipment component space in India. 

A Sector Defying Gravity

India's construction equipment industry is enjoying a strong run, powered by sustained public investment in highways, rail, and urban infrastructure. Between the pandemic trough of 2020 and FY24, equipment sales recovered and then grew briskly, helped by government projects and an urban construction boom, even as parts of the automotive market struggled with chip shortages, changing consumer preferences, and tighter financing. India’s construction equipment market is already worth an estimated USD 7–8.5 billion a year, and ICEMA’s vision document envisages it roughly tripling to around USD 25 billion by 2030, potentially making the country the world’s second‑largest CE market.

 By contrast, passenger‑vehicle volumes have reached record highs of about 4–4.3 million units, but growth is concentrated in SUVs and higher‑priced models while small cars stagnate, dulling earlier dreams of a low‑cost export hub. Commercial vehicles, meanwhile, face a bumpier cycle driven by freight demand, interest rates, and fleet consolidation, with electrification still at an early stage and not yet the main brake on diesel truck sales. 

What's in the CE Box?

ZF, which is best known for its driveline technology, is bundling brains and brawn in its latest pitch to construction-equipment makers.

Under mounting pressure to trim fuel costs and ease operator strain, the company has packaged its ERGOPOWER transmissions with MULTITRAC axles, a pairing aimed at loaders and backhoes that spend long hours in punishing site conditions, Alexander Elsner, Head of Product Communication, Off-Highway Systems, explained. 

The ERGOPOWER transmission, available in four- or five-speed versions with an optional DirectDrive setup, promises efficiency as well as endurance. ZF claims the design can cut fuel consumption by up to 15% while improving productivity by as much as 40%. It shifts gears with barely a hiccup in power delivery, reducing the strain on both the machine and its operator. Less effort at the controls, ZF argues, also means less wear across the vehicle’s working life.

The MULTITRAC rigid axles are built to handle the heavy lifting. Fitted with wet multi-disc brakes that stay cooler than traditional systems, they shed less energy as heat and demand less maintenance. Their compact, lighter build leaves more ground clearance, an advantage on uneven terrain where every centimeter counts.

Backhoe loaders, which juggle digging and hauling duties, stand to benefit from the combined transmission-and-axle setup. The system is designed to withstand the torque spikes and constant gear changes of round-the-clock operation. ZF markets the pairing as a tough yet serviceable solution for machines that can’t afford downtime.

Even mixer trucks get attention in this tidy portfolio. ZF’s ECOMIX I hydrostatic drum drive transfers power through a compact geartrain that the company says delivers reliability with minimal maintenance. In concrete delivery, where timing and consistency are everything, dependable hardware can mean the difference between a smooth pour and a costly delay.

Meanwhile, ZF is pushing into the digital frontier with brake-by-wire technology. By replacing hydraulic lines with electronic control, the system lets software—not mechanical linkages govern braking pressure. Beyond simplifying maintenance, such smart braking could lay the groundwork for remotely operated or autonomous construction machines, an idea that is slowly mixing into the industry’s future plans.

Building Infrastructure for present and future

ZF’s new Coimbatore plant right now has only one or two lines in operation, but the layout tells a bigger story. The site has been designed with room to add new lines and effectively double its capacity when the time is right. That built-in flexibility follows ZF’s familiar playbook: enter early in markets with long-term promise, then expand step by step as local demand and export orders pick up.

The plant’s location inside a Special Economic Zone (SEZ) adds an important advantage. It makes exporting easier and avoids tariff complications, a critical factor in keeping costs competitive. It’s a strategy that’s worked before. ZF’s wind-power gearbox business, also based in Tamil Nadu, once shipped around 85% of its output overseas. Only recently, as India’s renewable-energy market expanded, did domestic demand start to catch up. The Coimbatore facility is likely to follow the same journey , starting out as an export-driven operation and gradually growing into a strong regional manufacturing base.

“The facility is heavily exporting from there,” ZF executives confirmed. For Indian construction equipment makers such as JCB, Caterpillar India, and Komatsu, having a dependable local component supplier like ZF carries strategic weight.

"By harnessing India's potential, we aim to drive innovation and economic progress, ensuring that our products not only meet the needs of the Indian market but also set benchmarks worldwide." Passey added. 

The bigger picture

ZF’s ongoing reorganization around India deserves an important mention. About four or five years ago, the company took a major step by elevating India to “region” status, putting it on par with Europe, North America, China, and the Middle East-Africa division. It might sound like corporate housekeeping, but the change is far from cosmetic. The head of ZF India now reports directly to the company’s global board, giving the Indian business a seat at the top table, a privilege usually reserved for the world’s most mature markets.

ZF Group maintains a strong presence in India, producing high-end technology products locally for a wide range of vehicle applications, from active and passive safety systems, steering systems, clutch systems, axle systems, and chassis and suspension components for commercial vehicles to steering systems, transmissions, and chassis systems for trucks, plus steering systems, transmissions, and axles for off-highway uses. The company also supplies gearboxes for the wind turbine industry, alongside powertrains, chassis components, and safety devices tailored for the light vehicle sector.

In India ZF operates through 14 entities, including one joint venture and 10 global engineering centers. ZF Group in India has its corporate office in Pune. With a strong presence across the country, ZF Group in India has steadily grown its manufacturing footprint to 18 locations. The ZF Aftermarket division provides a wide range of spare parts for product brands SACHS, LEMFÖRDER, TRW, and WABCO with strong service support. ZF in India employs more than 15,400 people across India, including its JV partners.

Globally, ZF Group operates 161 production locations across 30 countries and employs approximately 161,600 people worldwide. The company reported sales of €41.4 billion in fiscal 2024. The Industrial Technology division encompasses ZF's activities for off-road applications, including agricultural and construction machinery, forklifts, special vehicles, rail systems, marine propulsion technology, and wind power technology.