What is your opinion on the economy reviving in this financial year with the current changes in the business scenario? What is the plan of action you intend on implementing, moving forward?
The industry has witnessed a break in investments and expansions at a macro level. We are cautious for now but optimistic for the future. In the last 20 years, the Indian automotive industry has witnessed a CAGR of double-digit growth YOY. We have witnessed a distinct trend about the automotive industry i.e. it is very cyclic. Also, every peak has been significantly higher than the previous one. For example, if one looks at the commercial vehicle segment, there is a drop every four to five years and that is inherent in this industry. 2019 was like an aberration, but we are still very optimistic that the industry will continue to grow.
The most important thing is the timing and challenges that come in the way. We, at Schaeffler, are very pragmatic but optimistic. We have invested in plants, got our approvals done and everything is in place. At the first sign, we are ready to go, and we are very clear that as the market improves, it will continue to grow, and we will have much better YOY growth in the coming years.
How are you preparing yourself for the changes that are set to come in 2020? How do you intend to make the best out of this situation the unconventional way?
When one talks about non-conventional methods, previously, we relied on customer feedbacks, industry forecast, etc to draw our plans. But now the trends are changing. Preparedness is important for future opportunities. Conventionally, we used to wait for a confirmation to come in from the customer and then we would start investing. Now, the process requires far more agility. Data is playing an important role here; it allows us to prepare ourselves for sudden decisions. We are doing all the backend homework that is required for quick decision making. 2020 is bringing in a huge change for the automotive market, because when we go to BS VI, the whole canvas changes, especially keeping the Indian conditions in mind. Like all new implementations, there are going to be some teething issues creating opportunities for technology companies like us. We must map and watch the competition very closely and have an understating of the market. Thereby, reiterating that, we see these changes as an opportunity, and we want to keep pace with the changing times.
In today’s market, it is important to stay competitive and relevant to the customers. How do you plan on staying ahead in the market?
Since we are already in 2020, trying to do anything now is not going to be of much use. We have been doing a lot of work, research, data analysis, industry mapping, etc from the beginning of 2019. We have looked at three different areas of being competitive. We are taking a three-pronged approach:
Localisation & sourcing – This is an important factor for India for commercial reasons as it is a price sensitive market
Technical – For this, we have support from our headquarters in Germany as they have experience with Euro VI and electrification
Management in current market – We are aware of the fact that we have not extracted the potential, in terms of business from the commercial vehicle segment, which includes light and heavy commercial vehicles. So, we have identified a huge business opportunity in these segments and are working towards it.
Upcoming challenges can no longer be met using conventional methods. What’s your take on this?
We mentioned about the speed of decision-making and speed of execution, and, we need to be innovative and think out-of-the-box. Penetration is something that we are focusing on. Especially, in the areas that we’ve not been present in the past. We are critically examining our ‘content per vehicle’ versus the ‘potential content per vehicle’ and asking difficult questions, like our lack of presence in certain areas and how we can capitalise on the challenges and convert them into opportunities.
How is Schaeffler working on bridging the gap between optimising existing technologies & investing in advancements?
Schaeffler is at a huge advantage as our HQ is working on Euro VII and beyond, thereby, providing us with a lot of experience tales. It gives us a huge technological edge. At the same time, we understand that we cannot implement/copy-paste the same technology here. A lot of adjustments are required keeping the Indian condition in mind, like the environment, driving habits, etc. We are consciously optimising technologies and not just experimenting by copy-pasting. We have good experience and a capable team in India working with our technology leaders at our HQ. We have modified and adapted technologies as per Indian customers and conditions. We have capitalised on those opportunities.
As far as investments are concerned, we have continued to make certain investments especially in projects related to the regulations; for example – BS VI and others as well. As a global company, we have a lot of technology that will be implemented in India in the next 10 years or so. At the same time, we are also working on e-mobility, which is also our global strategy.
How are you planning to build a sustainable ecosystem for nurturing global business and achieving manufacturing-driven growth in India?
When we talk about building a sustainable ecosystem, a good ray of hope is to look at tier II & tier III cities. The metro cities are bursting at seams already. Whereas, there is a lot of scope in the tier II and tier III cities, where the infrastructure is reasonably good. That is one area that we are focusing on.
Another area that we need to start moving fast on is the scrappage policy. Once this policy comes in, we expect another surge that the industry will witness, and we are hopeful that the government implements this policy soon, not only to improve the industry scenario but also the environment.
Referring to the manufacturing growth, one of the areas that we need to look into is the efficiency. We are 20-30% lower in our efficiency as compared to the more productive counterparts like China, South East Asia, etc. At Schaeffler, we are trying to build on efficiency and productivity. We need to look at a sustainable way to improve the manufacturing productivity. Another area that needs attention and must be taken seriously is the Skill India kind of programs in order to build a sustainable ecosystem.