German automotive major sets up shop in India

German automotive major Continental AG has set up a greenfield plant in India's IT hub to manufacture electronic components for the burgeoning automobile market in the sub-continent.

Located in the Bommasandra industrial area on the outskirts of the city, the Rs 2.2 billion high-tech facility, with a research and development centre, will produce instrument clusters for cars, commercial vehicles and two-wheelers, immobilisers and engine management systems for diesel and gasoline engines, electronic control units for power-assisted steering and body control units for interiors.

"The booming Indian automotive market has become strategically important for us to deepen our business in the sub-continent. The projected annual growth rate of 15 percent is a huge opportunity to leverage our expertise in vehicle technology and supply affordable components and systems to Indian and multinational OEMs (original equipment manufacturers)," Continental Asian president Jay Kunkel told reporters here late Monday.

The Rs 1.4 trillion global major has been shipping a range of electronic components from its plants at Hanover, Germany and Shanghai, China to Indian OEMs. It has also been supplying mechanical clusters, sensors and belts from its manufacturing facilities at Manesar, Gurgaon and Sonepat in Haryana, Pune in Maharashtra and Kolkata in West Bengal.

"The recent acquisition of Siemens VDO Automotive AG worldwide for 11.4 billion euro ($18 billion) has brought its product engineering centre and automotive software development centre in Bangalore into our fold with access to their specialisation. The buyout has also pushed our ranking to number five among the world's major automotive suppliers," Kunkel said.

Among the Indian and multinational OEMs sourcing electronic components and systems from Continental are Maruti Suzuki, Hyundai, Tata Motors, Ashok Leyland, Mahindras, General Motors, Ford, Skoda, Eicher, Hero Honda and TVS.

According to an industry forecast, one out of two cars worldwide will be manufactured in Asia from 2012 as against every fourth car in 10 cars presently, as much of the growth is expected to come from emerging markets like China and India.

"In the coming decade, the focus of the automotive industry will be the mega-trend affordable cars, especially in growth markets such as India and China. With the Indian emission norms and safety legislations getting stricter, the vehicles of tomorrow will have more electronics built into them," Kunkel noted.

Continental India managing director Markus Distelhoff said the company would invest an additional euro 15 million (Rs 825 million) in the new facility by 2010 to expand the product portfolio and cater to a host of new models planned by the OEMs.

"By localising our product manufacturing, we will be able to save not only on import tariffs and transportation costs, but also become competitive in a market where global majors such as Denso, Bosch, Magna and Delphi are present," Distelhoff said.

The Indian subsidiary has also bagged a major order from Tata Motors to supply fuel pumps for its upcoming Nano, touted to be world's cheapest car.