2W segment is ramping up production faster than 4W: Anurag Garg

Vitesco Technologies - formerly the Continental Powertrain Division - offers a range of products such as electronic controls, sensors and actuators as well as solutions for exhaust after-treatment. Besides, it aims to develop innovative, efficient electrification technologies for all types of vehicle. In conversation with Rakesh Rao, Anurag Garg, Managing Director & Country Head of Vitesco Technologies, India, discusses the impact of COVID 19 on the auto industry, and the company’s plans for India.

COVID 19 has put a brake on auto sales in India. How did Vitesco prepare for this challenge?

COVID has been a major challenge for all the industries, not just in India, but globally. We have already seen almost three months of lockdown period and now, people are really coming out of it. The business is still not as usual, but at least we are trying to ramp up. Definitely, it has brought in some concerns, but, at the same time, certain opportunities, also. 

Being a global company has helped us in navigating the situation (during lockdown as well as while resuming production) better as we could adopt learnings from the other Vitesco units across the world.

How is the market scenario at present?

We supply to two-wheeler and four-wheeler segments of the industry. The demand is growing steadily since we re-opened on May 5. Two-wheeler sector is ramping up production much faster than passenger cars. If we compare May and June, volumes are definitely on an improving trend on a month to month basis.

Are there indications that the demand will rise further?

Yes. In passenger car, this month the industry was operating at about 30 per cent of their overall capacity in a normal situation. As the festival period arrives, we expect activity to pick-up and further ramping up of capacity to a better level.

What changes are you anticipating in the Indian auto industry due to COVID?

At present, companies are slowly ramping up production because of various reasons like lack of demand, constrains on supplier side, etc. The supply chain - starting from tier 1 to the last link in the chain - is interlinked and everybody will have to work in sync to ramp up production in tandem to the market requirement. So, the ramp up is going to take a little longer. People who had gone back to their original villages are already started coming back. These things are really going to impact as far as the overall market is concerned. It is a new normal and we will have to learn to live with this situation.

In the time to come, people will have less fear and will start joining the work, which will definitely help the automotive industry to ramp up faster.

Could you brief us about Vitesco's new greenfield project in Pune?

In January 2019, we had the ground-breaking ceremony for the new state-of-the-art technology plant, which is spread over about 20-acre land. The production at the plant started this year.

At present, we are focusing on all BS VI related products at this plant. Later, once the electrification starts, we will definitely be supporting that business also from this location.

In electric vehicle segment, what is Vitesco currently focusing on in India?

At present, we remain focused and committed to BS VI product line from the new Pune plant. Parallelly, we will keep working on the electrification because it is the future of mobility.

We will definitely start working on EV products once the market stabilises post COVID 19 and electrification picks up.

In general, governments across the world have become stringent on environment related issues. What does this mean to Vitesco? 

As said earlier, we are mostly into products which are required for all BS VI applications. While today we are talking about BS VI, Real Driving Emissions (RDE) will become mandatory from April 2023. Corporate Average Fuel Economy (CAFE) norms are also likely to be changed in 2028.

The overall restrictions will be going up, where in the people will have to ensure real drive experience or average fuel consumption (under CAFE norms) has to go down further. All our products will be able to help the industry to meet all those legislation in time to come.

What are the emerging trends in auto industry?

The focus right now is on BS VI. The next focus will definitely be moving more towards electrification. Industry 4.0 is already in place. These are some of the trends, which we are focusing on.

What are the challenges before electric vehicles industry?

Question is how fast we can do the localization. We would really like to create supply chain that is more dependent on the local suppliers than across the globe. And that would be one of the challenges. India will go for phase-wise electrification of auto industry. We are one of the largest producers for electric three-wheelers. The next cycle in the chain is two wheelers, and then it will pick up in the passenger cars. So, the next market that will definitely take a quantum jump towards electrification is the two wheelers.

How do you see market going from here?

The overall anticipation in the market is that the global auto industry will take 3-4 years to reach the same volumes of 2019-20. In India, being a growing country, we should not take such a long time to recover as we have the potential to grow much faster. But we really need to wait to see how the market shapes up. But overall, considering the trends in the last two months - again it is too early to say - the shared mobility is going to fade for the time being because the people are not comfortable in traveling in hired vehicles. So people will be really looking for more independent travel arrangement either two-wheelers or passenger cars.

Once we are little stable, the fear factor is gone, the overall market should start growing and the focus would be again more on the two-wheelers and then on passenger cars.