What is the most significant trend in the Indian passenger car segment? The increased adoption of diesel, says Mr Sanjay Sondhi, Managing Director, Honeywell Turbo Technologies.
“In Europe, more than 50 per cent of passenger cars are diesel, and all indications show that India is following this trend,” he adds, in a recent email interaction with Business Line. Mr Sondhi estimates the penetration of diesel vehicles in India to increase from 37 per cent today to 42-45 per cent over the next 5 years.
Two other major trends that he sees are:
The increasing popularity of small sized diesel engines, driving both Indian and global OEMs (original equipment manufacturers) to develop low-cost cars to bridge the price gap between the two-wheeler and the current range of small cars available in the market; and
A significant share of the three-wheeler passenger cars and commercial vehicles being upgraded to four wheelers such as the Tata ACE, driven by tightening emissions and safety regulations.
Excerpts from the interview.
How do these trends impact your company?
With the help of modern diesel common rail and turbocharging technologies, diesel cars now deliver better fuel economy and lower emissions while providing superior driveability. As India adopts more stringent emissions (the auto industry is gearing up to adopt Bharat Stage 4 norms by April 2010 in the major cities), the demand for advanced turbochargers for diesel car applications will only increase. Thus, we anticipate that the increased demand for small sized diesel engines which deliver more power with low fuel consumption will translate into wider adoption of turbochargers.
What are turbochargers? How do they help?
The basic concept of a turbocharger is to recycle wasted energy from exhaust gas, thus transforming more of the fuel energy consumed into power. While the principle of turbocharging is very simple, the application of the technology is increasingly challenging and complex from an engineering perspective.
Turbo diesels exhibit significant advantages over naturally aspirated gasoline engines, showing typical fuel efficiency gains of 30 per cent, with CO2 reductions of more than 20 per cent. On the gasoline front, double-digit improvement in fuel economy is predicted as a result of both direct injection and turbo technologies.
Honeywell Turbo Technologies is recognised around the world as one of the leading manufacturers of engine boosting systems for passenger cars and commercial vehicles. From providing its first turbo for Caterpillar tractors in 1950s to pioneering the groundbreaking VNT™ (Variable Nozzle Turbine) technology for passenger cars in the 1990s, and more recently, launching the first parallel sequential dual-stage turbo system, Honeywell has been leading the way.
Is there a slowdown, as being talked about? How ‘leading’ is auto sales as an economic indicator of growth?
The automobile industry in India has witnessed tremendous growth in recent years and is all set to carry on the momentum in the foreseeable future.
Though, recently India’s auto market, which is mainly financed by loans, has been hit by the central bank’s moves to curb liquidity and stem inflation, this could get offset by the car purchases which usually rise during the festival season from October to December.
As the industry being an indicator of economic growth, today, the automobile sector in India is one of the key sectors of the economy in terms of the employment providing directly and indirect employment to more than 10 million people. If we add the number of people employed in the auto-component and auto ancillary industry then the number goes even higher.
By 2016, the automotive industry should have created employment for 25 million people in India, according to government predictions, set out in its Automotive Mission Plan. Of this, 62 per cent will be skilled workers, and 10 per cent, unskilled; the balance 28 per cent would comprise management and general personnel.
For every job created directly by the automotive industry, a further seven are created indirectly in the economy at large. Taking these factors into consideration, it can be said that the automotive industry is set to have a major impact on India’s future economic growth.
Currently, the sector accounts for 5 per cent of India’s economic output, but it is set to grow much faster than the rest of the economy.
Is the Indian automobile industry seeing a shift from the replacement market to the original equipment market?
Traditionally, a significant part of India’s automotive component exports was for the automotive aftermarket. However, with increased capability of Indian suppliers, there is significant growth foreseen in auto-component exports to global OEs.
The Automotive Mission Plan very clearly states that India will become a design and manufacturing hub of small cars for the automotive industry with players like Suzuki, Toyota, Hyundai, Tata, Renault/ Nissan all exporting cars from India with Indian made components. This then is also providing additional opportunities to the auto component industry to export components from India. Currently the auto component industry is exporting $2 billion worth of components directly; and the Automotive Mission Plan predicts this export to increase to $15 billion by 2015.
Has the auto component industry been able to attractive FDI (foreign direct investment) to the optimal extent?
Recent years have witnessed more and more global players making their entry into the Indian market through joint ventures, collaborations and wholly owned subsidiaries. With the new found interest of leading global giants, the Indian auto market has turned fiercely competitive with India’s dual advantage of a ready market and low cost manufacturing base.
The government has also relaxed rules to promote expansion of the auto industry in view of the escalating demand from the newly affluent middle class. Foreign automakers can now set up fully owned subsidiaries giving India a potential edge over China with its local partner mandate.
There is also a boom in auto ancillary companies. India is an attractive outsourcing destination for global auto companies because of its strong engineering skills and low costs. Sourcing parts from India is 10-20 per cent cheaper for US automakers and about 50 per cent cheaper for their European counterparts.
Among the car companies that are investing in India are US automakers General Motors and Ford, Germany’s BMW and Daimler Chrysler AG, France’s Renault, Japan’s Suzuki, Toyota and Honda, and South Korea’s Hyundai.
Are there inefficiencies that need to be ironed out to attract more investment?
Though things have dramatically changed in the country’s operating environment and stumbling blocks like poor infrastructure and complex policy environment have considerably improved, we are not yet at par with global standards. Also factors like high cost of power and high interest rates make us less competitive than many other countries.
How does the Indian auto industry fare on quality and cost factors globally? Has the fallout been felt by Honeywell too?
The Indian automotive industry has taken big strides in improving the cost, quality and delivery of its supplies. However, the Indian auto component industry has a long way to go before it can deliver cost, quality and delivery on a consistent basis. Also, the most visible improvement is among the bigger suppliers, while the medium/small sized suppliers have much to do before they can call themselves world class.
There is a clear need for the Indian auto-component industry to make significant investments in its R&D capabilities to become full service supplier to Indian and global OEs.
What is the R&D happening in Honeywell?
Honeywell Technology Solutions Lab in Bangalore has more than 5,000 engineers involved in developing products and solutions for our global businesses. Behind Honeywell Turbo Technologies’ impressive track record of innovations lie its engineering services and manufacturing facilities that span the globe. Wherever customers are located, the aim is to provide a seamless pathway that begins with turbo concept and product development and leads to program application and launch.
Big auto majors (both the domestic and foreign) have an ambitious plan of bringing low-cost small cars to India from next year. How will the auto component makers benefit from this new segment? Do you think there is an undue focus on petrol vehicles?
Honeywell is very excited by the opportunity of small sized diesel cars for the Indian market, and is in the process of developing turbochargers for small sized diesel engines specifically for the Indian market. These turbochargers are being developed by a team composed of Honeywell engineers based in India and in our passenger vehicle worldwide engineering centre in France. We are well positioned to play a key role in this growing segment.
While the use of turbochargers in India is currently restricted to the diesel segment, we believe that India will follow the European trend of increased use of turbochargers for petrol engines, driven by concerns of CO2 emissions and global warming.
Rising fuel prices and strict emission norms across the world forcing auto majors into go for manufacturing hybrid vehicles. Will these hybrid rollouts test the turbocharger market?
Beyond 2012 towards 2020, the internal combustion engine will remain the powertrain of choice with significant contribution from turbocharging technology coupled with extended use of biofuels and light hybrid technology.
With more automakers making an inroad to emerging markets, what will be the Honeywell’s expansion plan to meet the burgeoning demand?
Honeywell set up a state-of-the-art manufacturing plant in Pune in 2005, and has since invested significantly in establishing a local supplier network and local engineering for Indian customers. Catering to the growing demand for turbochargers, the plant has been manufacturing turbochargers for local customers and export. Honeywell is also introducing its innovative VNT™ technology to India.
Honeywell intends making India a hub for global sourcing of auto components and is making a significant investment in upgrading the skills and competencies of Indian suppliers.
Do you have a service network here?
Honeywell Turbo Technologies has already established a service network in India for its products with service centres in 8 major cities and plans to double this number over the next 12 months.
Source:-The hindu.
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