Ford’s EcoSport will be the first vehicle in India to get Continental's new turbocharger which is tailored to the needs of small downsized engines. Expect more such products as the company steps up its activities in India and China.
Ford’s 1.0-litre EcoBoost engine, which won the ‘International Engine of the Year 2012’ comes equipped with a small turbocharger which helps it offer power comparable to an engine double its size. The inline, three-cylinder direct-injection turbo-petrol engine will generate 98bhp/123bhp from a displacement of just one litre. That innovative turbocharger could now be offered for other vehicles in India also.
At the time of going to print, Continental was in discussions in China to offer it to other OEMs. It could also come to India as Continental sees good opportunity for the product here. “Absolutely. It is ideal because it goes (in) up to 1.6 litres (engines) and delivers the power of a 2-litre and good fuel efficiency,” says Jay Kunkel, president, Continental China.
Continental is also working on a new turbocharger that is being developed ‘in response to the increasing global demand for small, downsized engines with significantly reduced consumption and emissions’. The company says the concept is so scalable and flexible that it can be easily adapted to other engine sizes and outputs, thereby forming the basis for a whole new generation of innovative turbochargers.
India and China
Continental’s presence in China is far longer than India and its business there too is far higher than in India. Last year, the 30-billion euro Continental earned 10 percent of its global revenue from China. The Chinese business, which has 18 manufacturing locations, recruits 12-13 people on an average every day! “China will be a significant proportion of the incremental growth for Continental by 2015,” Kunkel said in a media meet in Chengdu, China.
Though the scale of their businesses may vary, Continental’s Chinese and Indian subsidiaries are working on various projects together. One such key area is the ‘megatrend’ of affordable cars. “This actually started here in Shanghai some years ago, as we recognised the need. This also has to do with the low-volume high-complexity challenges. But these challenges exist not only in China but also in India. So we have an affordable car team in India and even the leader of our interior division of the affordable car team has been based in India for the last few years,” Kunkel told Autocar Professional.
Kunkel, who has varied experience of working with different vehicle OEMs, an accountancy firm, and a component supplier, agrees that the Chinese automotive industry is heading for consolidation, but feels it is not going to be of the conventional type. In China, many OEMs are also owned/
co-owned by the government.
“Japan went through a period where the economy hit the wall and the result was talks about what consolidation would come in the automotive and banking, among other sectors? If you look now, there are still the same number of car companies. There were integrations at various levels, but these car companies didn’t actually go away. What will actually happen in China, I think, is very different. For someone who is in the business everyday, it is very difficult to speculate because it is very political,” says Kunkel.
India in focus
China is big, not only for Continental but every player in the automotive industry. India is too, though with a different story. Therefore, it is not surprising that Continental will, for the first time, hold its executive board meeting for the first time in India. In the history of the company, India is only the third country after the United States and China that the executive board meeting is being held outside its home country – Germany. Enhancing headcount and transferring R&D projects to India are some other steps that reflect Continental’s positive outlook about India.
INTERVIEW WITH JAY KUNKEL, PRESIDENT, CONTINENTAL CHINA
Are there any fields where Continental’s Chinese and Indian subsidiaries are working together for mutual benefit?
The short answer is yes. Probably in particular, one of our four mega trends is the affordable car initiative. I wouldn’t comment on specific products that we are working on together but yes, there is an absolute engineering integration.
Can you tell us which areas are they working on?
It is more in multimedia, more in our interior division, but I need to be careful saying that. Because for example, in powertrains I mentioned some products like the ECU, which are in our affordable car engine management systems and transmission systems, and these could also be applicable to the Indian market where we are being approached, in standardising hardware and customising software.
The Chinese market is slowing down with a projected growth rate of 10 percent at best. In such a scenario, how will Continental be able to sustain its current growth?
I am confident of Continental achieving its targets. Our targets are not volume-driven, but value-driven. It is the OPPG (Over Proportionate Profitable Growth) strategy, but it is based on us increasing our annual growth over proportionate to the market in terms of value developed in the market. So even when the growth moderates in the production line, the increased content on the vehicle is still driving up the value and that increased market share in that value is what is driving our strategy.
So is it making up for the loss in volumes?
Not a loss in volumes, it is a decelerated growth rate. But if I make a final comment on the affordable car, when you say decreased value, for us it is not decreased value. There are two key points to it. One, it is also not decreased quality either because Continental will not compromise on quality, but different specifications. So what we need for the Autobahn in Germany, you probably don’t need for driving around Delhi. So if we produce such (high) specifications say for Maruti Suzuki, no one will buy it. So affordable car is also making sure that we have market specific specifications.
The Indian government has proposed healthy incentives for Electric Vehicles and Hybrid EVs. Will that make Continental step up its activities in these fields?
We are in a position to grow electric or hybrid vehicles in any market, but at the end of the day it comes down to the business model. China has been more aggressive about this upfront and at some point in the near future will be the global leader in electrification of vehicles. They have a very strong government plan behind this. But the actual details are still being worked out. What makes EVs and HEVs a bit challenging is that it is still an evolving technology and the technology 10-15 years from now may be a modification of the technology being used now or maybe there will be some new breakthrough in battery technology. So it is very difficult to say now. But in India, certainly, if the market is there.
There are a lot of discussions on this space (EVs), but we are only talking about less than 1 percent of the market. This is not simple stuff, so that is why we have a dual strategy and we focus on what we can do for fuel efficiency and fuel reduction in internal combustion engines because they aren’t going away tomorrow and we are talking about more than 90 percent of the market. But we have also, over the years, been investing in EV and HEV technologies for one of the significant players in the market.