Dr Markus Distelhoff
The managing director of Continental Automotive Components (India) tells us that the German component major is bullish about its Indian operations.
What is the purpose behind setting up a captive development centre in Bangalore?
The Technical Centre India develops automotive technology and provides software services for our Group. Since 2006, it has partnered with Siemens Information Systems Ltd, KPIT Cummins Infosystems Ltd and Wipro Ltd for developing and supporting multiple automotive engineering projects for its global customers at Continental. Now the Technical Centre is further expanding its Indian operations by establishing a captive development centre in Bangalore. It employs around 600 engineers and aims to grow by 20 percent year on year. India’s rich talent pool has attracted Continental to set up this Technical Centre in Bangalore for developing automotive technology for the world market. It is an essential part of Continental's global engineering network. After Germany and Romania, the Technical Centre in India is already the third biggest R&D location worldwide.
What are the investment in both the Tech Centre as well as your manufacturing plant in Bangalore?
The Technical Centre will be seeing an investment of Rs 150 crore year on year. Further, based on current and future order intake, we expect an additional investment of Rs 100 crore at our new electronics manufacturing plant.
Do you plan to increase the head count at the Tech Centre?
We are expecting that the success of the Technical Centre India will continue. As a result, we expect further growth by approximately 20 percent per year.
What is your perception of the automotive electronics market in India?
With emission norms and safety legislation in India getting stricter, the automobiles of tomorrow will have more and more electronics built into them. The current size of the Indian automotive electronics market is estimated at approximately $2 billion. With the electronics content in Indian automobiles expected to grow to 20 per cent from the current 10 per cent, industry sources estimate the market for automotive electronics to increase to approximately $3 billion-$4.5 billion by 2011. Continental in India is geared to meet this demand on emission and safety. Furthermore, the market is looking for cars with better comfort. We are a key player in this segment worldwide and can offer solutions appropriate for the Indian market. We have a very strong product portfolio from our automotive divisions — interior, chassis, safety and power train. Worldwide, our products are either in first or second position in their respective areas. We are constantly working on our engineering capabilities to localise technologies to emerging markets. We have also invested in production capacities in emerging markets such as India. The new electronics plant in Bangalore is a mark of our commitment to the booming Indian automotive electronics market. We are expanding our R&D capabilities to provide both local engineering and development support.
Do you plan to increase focus on your localisation drive in India?
Growth in Asia is important for Continental. We intend to achieve 25 per cent of our total sales in this region by 2013 worldwide. Continental India is a major contributor to this growth. We believe that localisation of the entire value chain will fuel this growth. We are focusing on localising manufacturing, R&D and purchase activities. The investment made in the Technical Centre here establishes India firmly in our global R&D footprint. This facility not only supports in our global R&D activities but also supports in developing appropriate products for emerging markets such as India.
Which automotive OEMs do you supply to in India?
Being the fourth largest automotive component supplier, we work with almost all major Indian and global OEMs in the country. We have a wide range of product offerings for our customers. Most of our products are new to the market and we work closely with the customer in localising them to suit market requirements. Our main strength is the manufacture of electronic components which is the growth driver in today’s industry. In our new electronics manufacturing plant, we produce ECUs for engine management systems, electric power-assisted shearings, instrument clusters and immobilisers.We are involved in most of the upcoming projects of almost all major OEMs in India. However, our confidentiality pacts disallow us to name the projects or the OEMs, but we can confidently state our association with almost all leading OEMs in their key projects.
Are you optimistic about the growth prospects in the Indian market, despite the slowdown?
With the widened product portfolio in automotive electronics, we have a significant share in the Indian automotive market. We have grown significantly in the past few years. Through this transition from mechanical to electronics, our value of offerings will increase and we expect our market share to reach about 13 percent by 2012.The global economic downturn has also affected the Indian automotive industry. The expected CAGR has come down from 16 percent to about 11 percent and this may even dip slightly below 10 percent. Volumes have gone down due to reduced volumes from the OEMs. However, Continental still sustains growth, backed with a strong business strategy. We have not lost any customers or orders. We expect the automotive industry to revive after the third quarter of 2009.
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