‘We plan to scale up employment in R&D in India.’

Dr Elmar Degenhart, CEO, Continental AG, speaks to Amit Panday on the India growth story, the role of the company’s R&D tech centre in Bangalore, automotive mega trends and the challenges involved in developing new technologies.  

India’s prime minister Narendra Modi recently visited Hannover Messe 2015. What do you think about the Make-in-India initiative? Do you think it is able to positively reposition India’s global manufacturing image?
Boosting the manufacturing sector (via Make-in-India), I think, is the right direction. Though it’s too early to expect results as of now, I believe that manufacturing will help localising more in India. Localisation is the key.

So you have to work on the infrastructure front as without that localisation will not work out. You have to get investors to invest into the country. You have to find ways to let the middle class grow. Everybody is highly confident that India can grow in the near future, not just in the context of vehicle production but beyond. But you have to provide the environment to stimulate growth.

How high are Continental AG’s stakes when it comes to fuelling growth in the emerging markets?
Our hope was that India will be at the level of 5 million units (passenger cars) soon. But this unfortunately could not materialise. [Total passenger vehicle production for FY2014-15 stood at slightly over 3.2 million units.] So, we are having a two-pronged strategy — on one side, we are investing into boosting our capabilities such as localisation, and on the other, we are investing into the gamut of research and development.

Due to the economic slowdown in India in the past couple of years, the focus has shifted towards the R&D side. I think we will be more than happy if this would change.

Therefore, the market has to grow. India has such huge credibility and there are so many people who are positive about the country. It needs the right management and right management decisions to support the same.

What is your opinion about the role of the Bangalore-based R&D technical centre as regards Continental’s global R&D efforts?
The Indian R&D centre is already playing a very important role in our global new product development efforts. We are realising hundreds of new jobs within this year as we plan to scale up the employment in R&D in India.

While we have a motive of finding experienced engineers in Europe and America, we are using a lot more such opportunities in countries like India.

Conventionally, many technologies are designed and developed for luxury cars. When stripped off, they  eventually percolate down to smaller, more affordable cars. Now there are multiple independent technologies designed and developed for high-volume, small cars for emerging economies. On a macro level, how would you define Continental AG’s approach towards catering to both these ends?
Technologies now have become very complex because we have to address the three megatrends –  clean energy, efficiency, safety and information management — together. The second challenge is that 15 years ago, our customers used to roll out new models step by step over a timeframe of 12-15 months. This is no longer possible because new models have to be rolled out within three to six months now worldwide, which is a huge logistical challenge for them and for us.

Also, because it is no longer accepted that safety technologies are first introduced at the top and then will take five-seven years to cascade them down to mid-class and small type of vehicles, this has to be done in much shorter timeframes.

Safety relevant technologies are now coming down within 12 months or so. This means that the functional scalabilities of various technologies exist from the very first day of their development. The functional scalabilities can be moved up or down, depending upon the requirements.

Not are only the functional requirements much more complex, pushing up the number of electronic control units in cars over the past 15 years, but step by step the software which we have to develop is increasing continuously. We have products where 75 percent of the development efforts are spent only on developing the software. We didn’t have such products 10 years ago. So the complexities have increased not only on the technology side but also on the functional side. This is true also with regard to expanding technologies into all vehicle segments in a much faster timeframe.

The next challenge will be that we are introducing systems which can be enhanced by new software updates during their lifetime. In the past, we had electronics that had limited capabilities. Then we put in software. In the future, drivers will not accept that their infotainment systems are seven years old after seven years. So our customers together with the suppliers have to be able to enhance functionalities, step by step, during the lifetime of the vehicles.

This interview is published in the July 1, 2015 print edition of Autocar Professional