German auto components major ZF has said that India is a big focus area for the group and it will not just look to sell its products here but also use the country as a sourcing hub and an R&D base. The company will be investing ₹1,800 crore to create additional capacity and capabilities to emerge as a leading supplier to the Indian commercial vehicle industry.
“India is a strong hub and pillar for ZF. It’s a growing region for us and we have built a separate organisation here at the group level. It is not part of Asia Pacific but a separate region for our group,” Wilhelm Rehm, Member of the Board of the Management, ZF Group’s CVS Division said during an interaction with BusinessLine.
The Commercial Vehicle Solutions (CVS) Division of the Germany-headquartered ZF, formed in January this year by combining its commercial vehicle technology division with Wabco, which it acquired, seeks to focus on trucks and buses, aftermarket, and trailer and off-highway segments, even though the latter two categories are yet to evolve in a big way in India.
In better position since Wabco-ZF merger
“After the merger of Wabco-ZF, we are in a much better position to support Indian customers with a completely additional set of product lines. Also, ZF being a next-generation mobility leader globally, we would like to supportOEMs with advanced technologies, adopted and tweaked for Indian requirements, and also localised solutions wherever possible,” said P Kaniappan, Head of ZF Commercial Vehicle Control Systems India Ltd (ZFCVCSI).
ZFCVCSI will bring new products from the global portfolio, localise and sell them at price points that will be accepted here with the help of the group’s strong 300-odd engineers’ team in India.
Rehm is of the view that localisation is essential as it will provide access to the customers in India. “The Wabco team in India is very strong in frugal engineering. In transmission areas, the products we sell in Europe are too expensive for India and also for European design. This is where the Indian engineering team will help,” he added.
For the CV business growth, Oragadam (near Chennai) manufacturing operations will play a bigger role though the company has factories at Ambattur and Mahindra City. Since all factories are operating at full capacity, the company has acquired 45 acres of land at Oragadam for expansion. It is planning to invest ₹1,800 crore over the next 10 years. The proposed expansion is expected to support the future of CV growth and to grow exports.
“Our objective is to help the Indian customers to differentiate and succeed with our technologies and cost-competitiveness. In this direction, we would like to partner with them and offer the solutions instead of giving something already available. We can also co-create new solutions along with the customers,” said Kaniappan.
“The advantage of local footprint and local engineering capability is essential to align with the customers and understand their requirements,” he added.
Braking systems market
In the braking systems market in India, the group has a strong leadership position with its long-standing relationships with the OEMs. It seeks to acquire a similar pole position for additional product lines such as transmission systems, chassis components, clutch products and electric mobility segments, going forward.
“India is not only for selling our products and solutions but also a major sourcing hub and also for development works in some technology areas,” said Rehm.
At the moment, ZF is sourcing more than €100 million out of India and will increase it further in the coming years. Also, the company seeks to position itself as a partner for the EV transition of OEMs as it is of the view that an integrated solutions provider like ZF will play a pivotal role to keep the pace of the shift as all transition costs can’t be borne by the OEMs.