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Automobile R&D investments soar on new regulations, emerging technologies

Multiple factors have driven the increase in R&D spending

T E Narasimhan  |  Chennai 

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Automobile companies’ expenditure on research and development (R&D), despite pressure on sales, grew in 2018-19 mainly owing to regulations and the emergence of new technologies.

An analysis of listed Indian automakers' (excluding Maruti) annual report for 2018-19 shows two-wheeler makers spent close to 2 per cent of their turnover on R&D, while other auto spent 3-5 per cent. and Mahindra top the table in R&D spending.

increased its R&D spending by more than 23 per cent in FY19 to Rs 2,965.25 crore from Rs 2,397.52 crore in the previous financial year.

Rajendra Petkar, chief technology officer (CTO), Tata Motors, said the company last financial year utilised money for developing clean technology vehicles, and implementing mandatory safety features. “More than Rs 1,200 crore was spent last year on BS VI. We are at the peak of developing BS VI and do not expect R&D spending to come down in this financial year,” said Petkar.

The firm made a substantial investment in clean and sustainable mass transportation and small commercial vehicles for last-mile connectivity, he said, adding, these investments focused on improving the cost of ownership. The company is looking to spend significantly on corporate average fuel economy (CAFE) regulations and electrification of mobility solutions.

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Automobile R&D investments soar on new regulations & emerging technologies

Multiple factors have driven the increase in R&D spending, said Kaushik Madhavan, vice-president (mobility practice), Frost & Sullivan.

“If you look at the commercial vehicle space, more than half the R&D spend is happening either on emission compliance or on hybrids and electrification trends. The likes of Ashok Leyland spent heavily on developing electric buses. They are even looking to leverage electric powertrain for trucks as well. In the last two years, original equipment manufacturers have spent on BS VI compliance. At the same time, some are spending more on the electrification initiative,” he said.

The investment of Ashok Leyland, India’s second-largest commercial vehicle maker, in R&D rose by around 46 per cent to Rs 658.13 crore (2.27 per cent of its turnover) in 2018-19 from Rs 452.49 crore a year earlier.

Investment in R&D could continue to grow in the near future on account of emerging technologies. Madhavan said: “I see safety- and powertrain-related R&D investment rising on the back of hybrid electrification and other technologies such as the automatic transmissions from CVs. It is in line with what is expected, although the amounts may vary.”

First Published: Thu, July 11 2019. 13:31 IST
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