‘Capacity crunch in supply of automotive components’

June 21, 2011 11:58 am

“With the current growth rate, India is one of the fastest growing automotive markets in the world…. However, we also see that the industry is witnessing capacity crunch in the supply of automotive components”, reveals Ramchandra Rao, executive director – India (automotive division) at Eaton
 
Automotive components manufacturing and Eaton in India
As per industry sources, the Indian automobile industry is reported to grow at 26 per cent in vehicle sales during 2010-11. This growth is mainly on account of robust economic growth, new model launches, ease of financing, and enthusiastic consumers. With the current growth rate, India is one of the fastest growing automotive markets in the world. With the stringent environment norms, there is a great stress on efficiency and sustainability and this will help bring in new technologies and solutions to the Indian market. These trends will provide a great opportunity for companies like Eaton, who have the right technologies to cater to the growing demands of the OEMs and offer efficient and effective solutions.  
 
However, we also see that the industry is witnessing capacity crunch in the supply of automotive components. To keep up the healthy growth rate, the components manufacturers need to cater to the OEM demands and will need to increase investments in capacities as well as capabilities.
 
Target OEMs
Eaton has a wide range of products for performance, safety and fuel efficiency for the automotive segment. We are at various stages of talks with passenger vehicle OEMs, off highway and truck manufacturers for many of our products. Currently, we supply engine valves for many passenger cars on Indian roads as well as the MLocker differential for M&M’s Scorpio which is being exported to South Africa.
 
Growth status
Eaton has been consistently growing its market share in the Indian automotive market and emerging as a preferred supplier of the OEMs owing to strong technology and innovation strength.
 
Prime growth drivers
The government is promoting infrastructure development heavily and that in turn offers a lot of opportunities for players like us having diverse businesses. Apart from this, we also see certain consumer trends such as increasing disposable incomes, replacement of aging four wheelers, graduating from two wheelers to four wheelers, concept of second vehicle in urban areas and fuel efficiency.
 
Technological advancements
With the Euro-4 emission norms getting implemented in major towns of India, there is a growing demand of new technology products by the OEMs. The OEMs are looking at companies with global manufacturing & engineering footprint, and technological leadership as partners. The increasing demand on fuel economy improvement and compact size of the engine for a higher power calls for advanced design of components and subassemblies by the manufacturers is witnessed. Eaton has a big strength in this area with our proven products like supercharger, variable valve actuation, plastics.
 
Challenges
The key challenge ahead for the industry is to offer new technology and sustainable products at a competitive price. Eaton is confident that it will succeed in handling this challenge with the right technology and low total cost of ownership in terms of gaining significant returns in the long run.
 
Road ahead
Our chairman & CEO Sandy Cutler recently announced the sales target of $ 500 million for Eaton in India. To contribute to this growth target, we are further strengthening our position in Indian market and investing in resources and technologies to meet the growing demands of the customers.
 
We plan to expand our product offerings to the OEMs beyond engine valves and introduce valve actuation products, plastics & fluid connector products. We have already introduced torque products to the market.
 
Eaton’s recent initiatives
Our focus is clearly on introducing new products and technology to the existing and new customers. Apart from this, we are also concentrating on extending our share of business in the engine valves aftermarket segment which is growing very rapidly. Owing to the rapid growth in the passenger vehicle market, aftermarket has become a very important base for engine valves and we are working with a number of distributors and partners.