By T Murrali:
The Rampant Horse of Continental AG, Germany, began its gallop in 1871 by manufacturing soft rubber products, rubberised fabrics and solid tyres for carriages and bicycles under the name Continental-Caoutchouc- und Gutta-Percha Compagnie. It has covered a long distance.Continental’s logo horse stands on one of its hind legs with forelegs in the air ready to zip fast. Like the horse-instinct to run fast, in a racing track or grazing field, Continental AG has always been raring to go and grow globally by garnering co-runners or venturing into new frontiers. By 2017 the German company had €44 billion sales and over 233,000 employees in 56 countries. This feat was accomplished by its ceaseless quest to develop pioneering technologies and services for sustainable and connected mobility of people and goods. India was one of its prime markets since 1958. Continental AG chose the automotive tracks of India as a coveted scene of action in 2008. In ten years it has established itself as a major player in the automotive hubs of India with three divisions.
The Bangalore-headquartered Continental Automotive Components India has manufacturing facilities in Bangalore, Manesar and Pune, and presence in Chennai, the automotive hubs of India, with around 4,500 employees. With three automotive divisions, Interior, Powertrain, and Chassis & Safety, it has several business units, each with an extensive product portfolio. In its Bangalore plant the company develops and manufactures a wide range of electronic products including engine management and power steering ECUs, ABS ECUs,immobilisers, body control modules and instrument clusters for all vehicle segments. It also manufactures actuation ABS, airbags electronics, drum brakes, callipers, powertrain and chassis sensors, fuel supply modules and fuel rail assemblies in the other locations. The company supplies pumps, injectors and sensors to its customers in India from its global plants.
In 1958 International Instruments Private Limited (IIPL) was established, which could be taken as the first step of Continental in India. This is because IIPL entered into a technical cooperation with VDO Adolf Schindling AG in 1979 and the organisation’s name changed to International Instruments Ltd. In 2001 International Instruments Ltd became part of Siemens VDO Automotive AG and the following year it was renamed as Siemens VDO Automotive Limited. Siemens was primarily into automotive electronics, especially instrument clusters, while during the early part of this millennium India had mechanical instruments. Moreover, most of the business was in the two-wheeler segment. The transformation to electronics instrument clusters began from 2002-03.
Continental AG wanted to enter automotive market in India through safety component brakes. In order to pursue its interest in supplying and developing automotive components, it set up a liaison office in 2006. This was instrumental in establishing a joint venture later with Rico. Besides, it was also looking at options to get technical work done in India.
According to industry observers, one of the significant contemporary happenings was that Siemens VDO Automotive Limited was mulling options for divesting itself of the automotive business and one of the options it had was to go for an initial public offer (IPO). While it was discussing these options the company also received offers from several players for acquiring the automotive business. Finally, Continental AG won the deal and it acquired the automotive business of Siemens VDO globally in 2007 and the India operations became part of Continental AG.
Continental’s acquiring of the automotive business of Siemens VDO gave the real entry for the German company to India while the liaison office helped in establishing the joint venture with Rico. In the following year (2008) Continental Automotive Components India was born. In 2009 the company set up the Tech Centre India and it has been growing continuously to reach around 3,000 engineers serving.
“The company (Siemens VDO Automotive Limited) that became Continental in India was already well on its way to become a supplier of automotive electronics,” said the former Managing Director and CEO of Continental Automotive Components India, Claude d’Gama Rose. Claude came to Continental from Siemens with which he had been working from 2003.
It is the 10th of Continental Automotive Components in India. However, the global company’s association with India, from its Rubber Group point of view, goes back a little further. In 1974 Modi Tyres was established and later it entered into a technical and brand agreement with Continental AG. In 2011 Continental acquired Modi Tyres, and a couple of years later it began manufacturing radial tyres. Today the main products manufactured at Continental’s tyre plant at Modipuram include Commercial Vehicle Tyres (TBX & TBR), Passenger Car Tyres (Radial).
As for ContiTech, the journey began in 1979 for establishing Andrew Yule Belting division. In 1992 Hilton Roulunds Ltd was established in India as a joint venture (JV) and in 1999 Andrew Yule established a JV with Phoenix AG. In 2002 the name of the company was changed to Roulunds Codan India. A few years later Continental AG acquired majority stake in Phoenix and in 2006 Roulunds Rubber became fully-owned subsidiary of ContiTech, a division of Continental AG. In 2009 Phoenix Conveyor Belts India became a fully-owned subsidiary of ContiTech. Benecke-Kaliko set up engineering and sales office in 2012 and in 2015 ContiTech acquired Veyance Technologies and integrated in India.
In the automotive front, Continental acquired Emitec, formerly operated as a 50:50 joint venture with GKN, in 2013. Two years later, it acquired Elektrobit and set up an office in Bengaluru.
Well, what was the reason for the acceptance of the global company in India? Claude d’Gama Rose said that the technology company’s expositions and Tech Days had helped it to engage with customers better. These initiatives demonstrated its commitment to the domestic market. Besides, the value that it offered to the customers in terms of established relationship, in addition to technology, helped the company grow faster despite starting its business relatively late. The Tech Days offered tremendous excitement to the engineers of its customers, even though most of the products showcased, would have taken several years to come to India. “The excitement that it produces and the bonding that it brings between the engineers from the components side and their counterpart at OEMs, is really something noteworthy. These events have always a ‘wow’ factor,” he says.
While this is in relation to the OE market, the other area that has dramatically grown is its Tech Centre. It is increasingly contributing to India market, though it was not the original objective. When the decision was taken by the liaison office to look into sourcing technical work done in India, Siemens was already engaged in this space through Siemens Information Systems Limited. The automotive division of Siemens already had technical groups in India working for its global operations. When Continental acquired Siemens, the engineers who were carrying out offshoring work, gradually moved to Tech Centre of Continental in India. In 2009 when Continental set up its Tech Centre in a different location in Bengaluru, most of the engineers were those moved from Siemens. Though the company has been, alongside, adding head-count at the Tech Centre,the real change took place in 2014 when it moved, in addition to tyres and brakes, into ADAS – advanced driver assistance system and PSS – pedestrian safety systems, as the growth was dramatic. The Tech Centre has been growing much faster than it had planned. This is because of several advantages including cost and skill availability, especially in automotive and software. Today the centre delivers high quality and cost-effective support to Continental globally. It works on a hybrid concept, combining the strengths of an in-house development centre, with offshore development centres operated by partners.
In October 2017 Continental named Prashanth Doreswamy as its new India head. He took over as Market Head of Continental India and Managing Director, Continental Automotive Components India, succeeding Claude d’Gama Rose, who retired end of 2017.
Earlier, Doreswamy was Country Manager and Managing Director, India & SEA, Cooper Standard India. However, it was a bit of a home-coming for him as he had begun his career at International Instruments Private Limited, the organisation that became the genesis for Continental to enter India. According to Doreswamy, it has been a great journey since 2008 for Continental Automotive Components India, in terms of technological achievements and R&D contribution. “We welcome the initiatives of the Union Government like ‘Skill India’ and ‘Make in India’ which well suit our growth aspirations. India’s USP is the availability of young talent, especially in the software side that we have been able to make use of as a company on the growth path. Today our strength at our Tech Centre is about 3,000 people, having started just five years ago.”
“The Indian arm will be the centre of competence for two-wheelers including development of single channel ABS for India as it is a cost-sensitive market. Tech Centre India is also developing advanced technologies for ADAS along with Continental’s technology centres in Romania and Mexico. India is part of that systems with the technology group contributing much in developing new, innovative products. Besides having ADAS we see many customers going in for ESC – electronic stability control, much before the regulation that is likely to come by 2022. ESC could well become the future for Indian markets just as it is the standard elsewhere,” Doreswamy said.
On the powertrain side the company is present in all the portfolios and segments that include EFI (electric fuel injection), EMS (engine management system) with sensors and actuators. The next is after-treatment and fuel delivery systems. Finally, it is the EV (electric vehicle). “Electrification is going to be the future of automotive but there is a lot of potential yet to come for powertrains. Our prediction is that by 2025, 10 percent of the vehicles manufactured in India will have complete electrification, 30 percent will be hybrids and 60 percent with internal combustion engines; the trend we are seeing now is to go from diesel to petrol. Technology-wise we are moving from DFI to GDI for cleaner emissions and better fuel efficiency. We are ready to bring these products into India at an affordable cost; we continue to localise them,” he said.
Growth From BS-VI
Continental views that sensors and actuators are going to play a major role in emissions and treatment. “We have a very good product line for all these, for example, NOX sensors. From 2019 we would see a lot of growth coming in for BS-VI. The Emitec product portfolio for after treatment could be different, which would need treatment with some sort of filtrate. The EMS, engine management system, for two-wheelers will be a big area of growth for the powertrain division. These are the different segments we continue to work on,” Doreswamy said.
On the initiatives that the company is taking on the divisions that are purely into powertrain, he says that the peak for the commercial engines is yet to come but that does not mean “we are not working on the EV side. We are getting prepared in India for product proliferation both on the charging side and motor side; the prime mover could be either electric or the conventional engine. A lot of groundwork is being done to be ready to meet market demand when it comes. The other big challenge is 100x100x150 i.e. batteries that should be able to develop 100KW hours of power using 100 litres of volume (the space that the batteries occupy in the vehicle) and 150 kgs of weight; that is the objective,” he said.
Where is the company at this moment in this journey? Doreswamy says, “We are getting there. The challenge is in the cost of the battery. In India we do not have subsidy for this while in other countries it is 30 to 40 percent. The second issue that consumers are worried about is the driving range. There is a possibility for a swap-in-charge, the other business model that would evolve over time. I think adaptation will first come in public transport vehicles like buses and then migrate to passenger cars and two-wheelers.”
Continental Automotive Components India has been focusing on Interiors as this segment of the automotive industry has also been witnessing several changes – evolving to a pure control and information of basic parameters to advanced systems bringing features of mobile phones into the car. “We have developed many items for vehicle interiors and have recently showcased an innovative product, a 3D touch screen, at the Consumer Electronics Show, Las Vegas. In India we are working more on the cluster side and driver management systems ever since we acquired Siemens VDO. The other one is Body & Security that includes body and light control units, immobilisers and passive keyless entry. Also, there is the CVA (Commercial Vehicle Aftermarket) business followed by Connectivity and ITS (Intelligent Transport Services). That is how we are going through the value chain; technology is moving from key identification to facial recognition. These are the products adopted by Interiors across millions of vehicles globally and we have learnt many lessons from these programmes. We are into all the megatrends and have already supplied to 28 million connected vehicles worldwide,” Doreswamy said.
On the ITES side the company will have many products suitable for India as mobility keeps growing. It may be recalled that Continental has partnered with Avis Budget Group to make remote access keys. With this technology it is possible to pick and drop vehicles at any location using an App. “It becomes very useful in shared mobility which is likely to grow in India. We have all these products lined up and it is only a matter of time before the markets mature. Affordability is the biggest challenge; we will continue to focus on it and take a decision as and when required for localisation,” he said.
Innovation is driven by consumers; with India being a unique market,does continental take steps to develop technologies specific to India and similar countries? Doreswamy said one innovation could be on the ABS side to detect potholes on the road, where the driver could get a warning as the vehicle approaches a crack or break in the road. Another could be safety issues on the lighting side; not much is done nowadays as we are migrating from conventional to LED lamps. The LED content both inside and outside the car is increasing, which presents an opportunity to grow in that segment.
“We are good at designing and controlling ECUs; that’s why the new JV was formed with Osram to offer a complete lighting package to the customer. The idea is to combine innovative lighting technology with electronics and software to develop, manufacture and market intelligent lighting solutions for the automotive industry.
However, one of the issues that OEMs face with lot of innovative products coming in, especially from the electronics side, is the management of batteries as power demand from the vehicle has been exponentially increasing. Space under the hood has become premium so it is necessary to manage space availability and the demand for additional systems. Doreswamy reiterates the formula 100x100x150, which was derived from the issues faced by the OEMs. As power demand increases it is necessary to compact the systems. But Continental is not present in batteries. In that case how does the company optimise other systems so that the load on the batteries is reduced? It is done through the company’s inherent strengths in VCU (vehicle control unit) for battery operated cars that would be coming in soon.
Well what are the compelling reasons for OEMs to bank on Continental in India? According to Doreswamy, the most important reason is the product portfolio the company has. “We are very well placed in the market among all the suppliers. Also, we are well experienced in the megatrends that we are following in other parts of the world. When we bring that to India we add a lot of value to customers; not only bringing well developed products but combining them with the lessons learnt in application engineering elsewhere. And, of course, to localise constantly to drive affordability. These are the aspects that bring customers to Continental.” However, this is what most of the Tier-1 multinationals do. Is there anything else to score over the competition? He says, “When we bring in value in terms of things gone wrong that has been set right, by following global megatrends, we are years ahead of India. Customers need not go through the cycle of development as we do it for them; their time to market gets reduced. Moreover, our quality is a major parameter.”
Continental Automotive Components India has a customer base spanning all major local and global OEMs in India. In its endeavour to provide best-in-class support to its customers, the company has invested in an in-house test and validation lab for its Engine Systems and Fuel Supply business units in India.