Auto component manufacturers will have to grow their appetite for risks, hedge their bets on alternative technologies and become more prudent financially to stay relevant, said officials at automobile firms in their address at the 58th Annual Convention of Automotive Component Manufacturer Association (Acma) titled ‘Preparing for the future’ on Wednesday. They pointed out even as the fate of internal combustion engine (ICE) hangs in balance amid government's push for cleaner technologies such electric mobility, the auto part companies should not show reluctance in making investment for the ICE as the latter is unlikely to disappear in the foreseeable future.
Auto component firms will need to work together with the manufacturers, step up investment in technologies, re-skill employees and enhance operational efficiencies, said Kenichi Auyukawa, managing director and chief executive at Maruti Suzuki India told the delegates.
“We must invest in new technologies and build capabilities and capacities in all these areas. Even if we look at a small EV penetration by 2030, still a large volume of IC engines will need some form of electrification. So please have a good appetite for new technologies, its research and adoption to Indian market conditions. Adoption of any new technology needs adequate infrastructure to take off and attain critical mass. Efforts are needed to set up a complete eco-system from procurement of raw materials to charging infrastructure and recycling of the batteries,” said Ayukawa.
India’s $51 billion auto component industry that has seen a robust growth year-on-year over the last four years on back of a strong sales momentum of automobiles in India and healthy exports.
“As is the case globally, e-mobility is fast catching the imagination of our policy makers; a definite policy delineating the road map for e-mobility in India is therefore the need of the hour. We are confident that as hybrid and electric technologies gains traction, vehicle manufacturers will support localisation of components,” said Nirmal Minda, president ACMA. Ashok Taneja, managing director at Shriram Pistons said while component industry is preparing for the future, manufacturers need to share risks and ensure a faster payback period.
“The future is going to be different from the past, said Abhay Firodia, president at Society of Indian Automobile Manufacturers (Siam). “We have to gear up as ACES (autonomous, connected, electric and shared vehicles) is not a fiction and will change the market in many ways,” said Firodia.
Guenter Butschek, managing director and chief executive at Tata Motors said with the auto industry going through a transformation, the big implications for the auto component industry is to “make itself engineering ready, tech-ready and business ready. The opportunity landscape needs to be tapped by finding solutions to problems, investing in emerging business models, nurturing existing relationships, forging new partnerships as well as ensuring active policing support,” he said.
Growing at a CAGR of 8-9 per cent, automakers expect passenger vehicle industry alone to be about 10 million units per annum by 2030. The scale of operations therefore, will increase nearly three times of the present levels. As a result together both automakers and their suppliers will need to triple efforts to meet the growth in volumes. “It implies a transformation in our mindset and change in our outlook. Our businesses will therefore, need to be re-looked and aligned to new scale of operations,” said Maruti’s Ayukawa.