ZF eyes €1 billion from commercial vehicle business in India, to invest €200 million

German auto component major ZF aims to regain its past peak to €400 million in revenues in 2022 for its commercial vehicle division in India and it has set itself an ambitious target to grow by two and half times to € 1 billion by the end of the decade in the country.
The Group has committed over €200 million in India for the commercial vehicle division in the coming decade and it will be setting up a new manufacturing site in Orgaddam on the outskirts of Chennai, which has been selected to be eligible for the Government of India’s production linked incentive scheme.

Williem Rehm, Member of Board of Management and the global head of the Commercial Vehicle Solution Division at ZF told ET, India is a very important market and it employs 6500 people in India across all businesses. For the CV division alone, it has hired 300 software engineers who are doing a critical role on the future of mobility and the company is in the process of setting up a new plant to grow in this decade.

“We are investing heavily in India. There is a reason why India has been carved out as a separate region from Asia Pacific with a dedicated P&L to offer higher responsibility on the base,” added Rehm.

With a significant rise in global sourcing from India and strong bounce back in the domestic commercial vehicle market, India will continue to outpace and be amongst the fastest growing markets for ZF in the coming decade.

While the HQ has set itself a target of achieving € 10 billion turnover for the commercial vehicle business solution till 2030, India is expected to grow from €400 million to €1 billion in the same time frame, said the top management.

Rehm says his vision is to serve the customers with the next generation technology with a localised solution

“We have a clear growth path for the next 8 years. We want to grow this division to €10 billion by the end of the decade and India will be a strong contributor to this by not only participating in India's growth story but also source a lot more from India amid global disruption of supplies,” added Rehm.

To be sure, ZF currently sources merely €100 million worth of components from the global kitty of €20 billion. Given the disruption in supply chain globally, India should play a much bigger role in the future, assures Rehm.

With the integration of Wabco – ZF Commercial Vehicle Solutions has not only become the largest CV supplier in India, but it also boasts of the broadest product portfolio, offering everything from Truck & Bus up to Trailer technology as well as Digital solutions for Fleet Management, Autonomous driving aspects etc, said the company.

While the automotive industry is challenged as a whole, by the huge investments required not only for the transformation towards electrification, automation and digitalization, but also in modernization of the commercial vehicle landscape in the country, experts say suppliers like ZF can play a critical role of OEMs by reducing R&D costs for them and offering world-class solutions at the Indian cost.

ZF feels, by getting all parts and solutions from one source, customers benefit also from less integration hassle. Having a strong Indian arm with a significant market share in country, “there is now a clear runway” for growth for ZF in India says P Kaniappan, head of ZF Commercial Vehicle Control Systems India

“CV industry is rapidly evolving, under ZF, Wabco is much stronger to serve Indian customers with global quality and Indian cost. As an integrated entity, ZF is working with multiple OEMs in defining the future technology roadmap, which will ensure a bigger participation,” added Kaniappan.