An automotive supplier brand at the forefront of technology, Continental is known for its path-breaking range of safe, efficient, connected, intelligent and affordable mobility solutions. We find out the views of Mr. Anurag Garg, Head of Powertrain Business (India), Continental, about India’s BS-VI mission.
Excerpts:
Market impact
As rising pollution levels necessitated us to leapfrog from BS-IV to the most advanced emission standard for automobiles BS-VI (equivalent to Euro-VI), the industry will go through a period of transition on the back of increased investments and lower demand temporarily resulting from the hike in prices. Industry-stakeholders have already made the optimum investments to upgrade their products to meet the new emission standard.
Continental’s readiness
For India, Continental is ready with the required technologies in meeting the legislation. Our technologies include electronic fuel injection system for 2-wheelers – which is a shift from carburettor to precise electronic fuelling system. As a result, there is no wastage of fuel and also helping to control emissions. While in passenger cars, light trucks and commercial vehicles, technologies such as catalysts & filters, lean NOx trap, Diesel Particulate Filter and Selective catalytic reduction help in controlling harmful pollutants from the vehicle exhaust.
Cost implications
BS-VI vehicles, especially diesel vehicles are expected to become more expensive to their petrol counterparts in making this transition. With having said that, we expect the compact car segment in India to gravitate towards gasoline variants. What becomes vital is the seamless implementation of newer norms. Electronic Fuel Injection (EFI) and Engine Management Systems (EMS) are expected to become the norm in the 2-wheeler space. This will also deliver better drivability and lower fuel consumption. The next-generation of our EMS is carefully designed & localized to meet the market requirement in India. In the CV segment, we do not expect boost in the truck sales because of pre-buying. We already have excess capacity as a result of axle norms, that came into the effect November last year.
Challenges
The biggest challenge is to localize the required BS-VI equipment to make it cost-effective. We at Continental are driven by the strategy “in the market, for the market”, which means from the conceptualization to production and support thereafter, we are present to provide cost-effective solutions to OEMs. Without any compromise on quality, Continental is localising the entire value chain starting from sourcing, R&D, manufacturing and marketing to suit the customer requirements.
Opportunities
BS-VI-compliance will for obvious reasons encourage more localization across the industry. Improved on-board diagnostics which becomes a requirement to achieve lower emissions, coupled with cleaner BS-VI fuel is likely to reduce the overall maintenance costs of vehicles in the future. Bringing the industry on par with global emission & product standards will ensure that advanced technologies can easily be introduced in the country by global manufacturers. This can effectively integrate R&D activities and bring down the cost for the same.
Outlook
Continental adjusted its outlook for fiscal 2019. The main reason is the continued decline in the global production of passenger cars and light vehicles. Continental had previously expected global automobile production for 2019 to be at the same level as the previous year. According to the latest developments in global automobile production, the Dax company now expects a decline of around 5 per cent for the full year. Furthermore, there are indications of unexpected changes in customer demand as well as potential warranty claims in the Automotive Group in the second half of the year. The causes of these potential warranty costs and the corresponding amounts are not clarified at this point in time. The sales forecast adjusted for the aforementioned reasons and which is based on a stable exchange-rate trend compared with the first half of 2019 is now around €44 to 45 billion. Accordingly, the adjusted EBIT margin for the full year is expected to be around 7 to 7.5 per cent.