ZF is a familiar brand name in the Indian commercial vehicle industry. ZF has been in India for nearly three decades with very strong relationships with Indian OEMs. Initially the company entered into licensing agreements with Indian companies for manufacturing transmissions and steering systems. With the increasing opportunity in Indian market, ZF has started playing a bigger role, setting up wholly owned subsidiaries and independent manufacturing facilities.ZF CEO Hans-Georg Härter: “The location in Pune is an important basis for supplying the growth market of India”. ZF increases its commitment in the growth market of India. The supplier group has now opened up an assembly plant in the industrial center of Pune, planning to produce an annual 25,000 heavy truck transmissions in the medium term.
ZF is a leading worldwide automotive supplier for Driveline and Chassis Technology with 123 production companies in 27 countries. In 2010, the Group will achieve a sales figure of roughly EUR 12 billion with approximately 63,000 employees. ZF is among the top 10 companies on the ranking list of the largest automotive suppliers worldwide.
As mentioned earlier, ZF has been doing business in India for roughly three decades. Usually, joint ventures were founded with local partners, where ZF had a minority share or licenses were granted to Indian partner companies. Hans-Georg Härter: “We have adapted our strategy in the past few years to account for the rising significance of India. ZF now increasingly has majority shares or companies operated purely by ZF.”
India has nine times the surface area of Germany and approx. 14 times as many inhabitants – but only about twice the amount of road kilometers. “The comparative figures illustrate the potential that we see in setting up and expanding an efficient traffic infrastructure in India”, says Rolf Lutz, Group Executive of the Commercial Vehicle and Special Driveline Technology division. “We want to make use of this opportunity with our new truck transmission plant.”
The new truck transmission plant has been established over an area of 54,000 sq. feet. “Unlike our competitors we can offer the entire product range for commercial vehicle transmissions: Manual transmissions, automated transmissions, and automatic transmissions”, explains Rolf Lutz. “We can supply anything that is demanded by the market – right up to hybrid modules for all ZF transmissions. In doing so, we adapt the existing ZF technology to suit the requirements of the local markets”, says Mr. Lutz.
ZF has planned to invest Rs. 75.5 crores in the truck transmission facility over the next 3 to 4 years out of which the company has made an initial investment of Rs. 35 crores.
“In the medium term, our new transmission plant will produce approx. 25,000 ZF-Ecomid 9-speed transmissions annually for heavy trucks up to more than 40 tons weight”, explains MandeepBhalla, Head of ZF’s commercial vehicle business in India. “Depending on the demand, we can produce other truck transmission types for our current customers Asia Motor Works, Tata Motors, Ashok Leyland, Mahindra Navistar, Volvo-Eicher, and Kamaz Vectra Motors as well as new customers.”
At production start, ZF employs roughly 80 employees in the truck transmission assembly plant; after production ramp-up, this figure will increase to approx. 150 in the next five years. “Transmission housings, gears, and shafts are already being produced in India; in the medium term, a localization level of 80 to 85 per cent is planned”, says MandeepBhalla. “And this is where an excellent supplier base, established during our long-standing commitment in India, will be very helpful”.
“The Ecomid is a global product. It is currently produced in Germany, India, Brazil, Russia and China. The product has a global foot print. Over 15,000 units of these are already on-road in the Indian market for the last over 4 years fitted on various trucks”, says Mr. Bhalla. Currently 30% of the Indian commercial vehicle market uses ZF technology products.
ZF currently has licensing agreement with Ashok Leyland and Force Motors for the Ecomid transmissions. These licenses were offered in 2004 and will last until 2014. “The market is moving towards heavier vehicle and heavier applications and with much better infrastructure there is a shift towards more powerful engines resulting in a change in portfolio of transmissions as well”, says Mr. Bhalla.
Automatic transmissions
ZF offers mechanical, automatic and automated mechanical transmission in its product range. The company is also developing a smaller range of hydraulic transmission.
ZF is a leading manufacturer of automatic transmissions and front axles for low floor buses. Infact the entire fleet of low floor buses supplied to DTC by Tata Motors and Ashok Leyland are fitted with front axles supplied by ZF.
“We are working with a few vehicle manufacturers to install ZF automatic transmissions in their vehicles. The fact is ZF does not develop a transmission and fit them in an application; we develop transmission for a specific application. ZF has reliable benchmarks to prove that our transmission will have lower life cycle cost”, adds Mr. Bhalla.
He further added: “We hope to have our automatic transmission on Indian city bus applications soon. As a matter of fact, all the European buses sold in India, the likes of Volvo and Daimler, use ZF Ecomat transmissions”.
ZF is also working on a modular concept wherein a basic mechanical transmission can be upgraded to an automated manual transmission and further upgraded to hybrid transmission.
ZF Group presence in India
Currently, the Group has a roughly 29-per cent share in SonaSomicLemförder Ltd. which produces car suspension components in Delhi, Uttaranchal and Chennai, a 26-per cent share in ZF Steering Gear (India) Ltd. which produces commercial vehicle steering systems in Pune, and a 50-percent share in ZF Electronics TVS (India) Private Ltd. which produces electronic components in Madurai.
Three years ago, ZF founded the ZF Lenksysteme India Private Ltd., headquartered in Pune. In March 2010, ZF and Hero Motors Ltd. founded the joint venture ZF Hero Chassis Systems. In doing so, ZF acquired half of Hero Chassis Systems, including the locations in Halol, approx. 500 kilometers north of Mumbai and Talegaon near Pune. A few years ago, ZF also established the ZF India Private Ltd. holding in Pune. ZF Services was set up with service locations in Raipur, Bangalore and Pune as well as the assembly plant of ZF’s Off-Road Driveline Technology and Axle Systems division which was i
naugurated at the beginning of 2010 with a production area of approx. 26,000 square feet in Pune.
“Mr. Bhalla says: “ZF is also working on project for shock absorber and this is likely to come to India by 2012-13”.
Mr. Lutz says: “In Asia, China is the largest market for ZF with a turnover of Euro 1.5 billion. India is the second biggest in Asia and expect to contribute Euro 200 to 250 million in turnover over the next 4 to 5 years.
ZF IPO
Mr. Bhalla says: “We are in the process of setting up an IPO (International Purchasing Office), a sourcing office which will source certain components from India. The components we manufacture in India in our own facilities and those sourced locally will have the opportunity to be exported to other global markets”.
