Daimler drives to become Motherson's second biggest customer

German luxury car maker, Audi, remains the largest contributor to the revenue for last few years

Motherson Sumi, the country’s biggest automobile components maker, has seen a shift in its global customer base.

Germany's Daimler, manufacturers of Mercedes-Benz luxury cars, has quickly moved to become the second biggest global customer of Motherson, from sixth only a year before. It has overtaken Volkswagen and Ford, now bringing about a tenth of the revenue for Motherson.

Audi, also of Germany and another luxury car maker, remains the largest contributor to the revenue, which it has been for some years, accounting for a fifth of sales. Audi is part of the Volkswagen Group but Motherson treats it and other brands in the latter entity, such as SEAT and Porsche, as individual customers.

Motherson's revenue was Rs 38,677 crore in FY16. Only 14 per cent of this comes from India operations. The company was set up in the early 1980s to supply a component for the Maruti 800 car. The company grew its international business primarily through a series of acquisitions and now caters to most global vehicle manufacturers.

Daimler’s association with Motherson began in 1997, when the Noida-headquartered company first sold components to the German arm in India. In recent years, Motherson made large investments into expanding its capacities for Daimler’s global expansion in Germany, China and Hungary. Motherson supplies exterior mirrors, door panels, bumpers and other trim parts to Daimler.

G N Gauba, chief financial officer at Motherson, says no two models of a car maker ever use the same product from his company. “There is an opportunity to redesign the component and add more value every time a car is being relaunched,” he said.

Motherson’s revenue from Daimler is poised to rise further. In April 2015, it got a new order worth Rs 15,400 crore from Daimler for a number of future cars of Mercedes-Benz. The amount will be realised over the lifetime of these orders, beginning 2018. Motherson is setting up two new manufacturing facilities, in America and Hungary, to service the new orders. The latter is expected to become operational in the fourth quarter of FY18, while the US plant will go onstream from the first quarter of FY19. Motherson already runs three dedicated facilities, two in Germany and one in China, to cater for Daimler.

Motherson says it is working on a policy where no single customer/country or component will constitute more than 15 per cent of its revenue.