VW India working on phase two of 1.5 diesel engine localisation program

by Amit Panday 08 Jun 2015

In Phase 1, VW India chose 18 suppliers to source locally made 25 high-value components for its 1.5-litre diesel engine.

Volkswagen India is now working to further localise its popular 1.5-litre diesel powertrain at its Chakan (Pune) plant.

Under phase two of its engine localisation program, VW India’s corporate purchase department plans to select a few more local suppliers to source another set of 15 crucial engine components for the 1.5 TDI engine.

It is known that under phase one of the local assembly operations of its 1.5 TDI, the company currently sources 25 different high-value components such as turbocharger, connecting rods, vacuum lines, flywheels, engine brackets, oil sumps and others from 18 different local suppliers, of which some are already existing suppliers to the company. To finalise these 18 local vendors, VW India had considered close to 35 different component suppliers in the bidding process.

In an email interaction with Autocar Professional, Hans-Georg Festing, executive director, corporate purchase, Volkswagen India, revealed that, “as of now, 25 parts have been locally acquired and these are for the first phase of localisation. We are currently in the second phase of localisation and this would add another approximately 15 parts.”

Some of the suppliers which are already supplying engine parts to VW India are the Bangalore-based, US$-100 million Sansera Engineering (manufactures high-precision machined engine parts such as connecting rods, rocker arms, gearshift forks, crankshafts and others for four- and two-wheelers); Honeywell Turbo Technologies India (manufactures turbochargers for Honda Cars India, Tata Motors and other OEMs); Rane Engine Valves (manufacturers engine valves and valvetrain components); and Mahabal Group (Maharashtra-based US$ 70 million supplier of cylinder heads, manifolds, assembly flywheels, brackets, hubs, pulleys, front axle assembly, braking systems and many other parts).

Volkswagen India, which has been working to achieve operational profitability through various local developments at its Chakan and at Aurangabad facilities, has invested euro 30 million (approximately Rs 240 crore) in setting up the new engine assembly plant at its Chakan facility. The engine assembly plant, located adjacent to the main car assembly area, is spread across 3,450 square metres.

“We have invested on setting up the assembly line, engine testing facilities, manpower training, localisation, and on other areas. There is a single assembly line for the engines and the total assembly capacity is over 98,000 engines annually in a three-shift system. At the moment, the facility is running in a single-shift system and assembling engines as per the demand from the market,” added Festing.

Currently, the 1.5-litre diesel engine powers all three cars manufactured at the VW Pune plant – VW Polo, VW Vento and Skoda Rapid. The engine is available in two power outputs (90 PS and 105 PS). “The 1.5-litre TDI engine contributes to over 40 percent of the total cars produced at the Volkswagen Pune plant for the domestic market. With local assembly of this engine, the necessity to import those many engines from Europe has reduced, thus improving the overall cost structure as imported engines attract higher costs,” said Festing.

Festing also said that the suppliers to VW India stand a chance to win orders from VW globally as well. “There are several suppliers of VW India which have been first-time suppliers to the Volkswagen world. After being developed here, they are now supplying to our global plants, not only of the Volkswagen brand but also other brands of the Volkswagen Group. While this is true in case of a lot of suppliers for other parts of the car, it is also true for some engine parts. For example, the crankshaft from Bharat Forge is being exported by the supplier to the Volkswagen plant in Polkowice, Poland and to the Audi plant in Gyar, Hungary,” he said.


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