Bullish on India, the Marquardt Group of Germany has expanded its global R&D operation. It has also bagged a big Tata Motors order and is scouting for new business. Amit Panday reports.
15 Apr 2015 | 8892 Views | By Amit Panday
On March 19, Germany’s 838 million euro (Rs 6,405 crore) Marquardt Group, a leading global manufacturer of electro-mechanical and electronic switches and switching systems for automobiles and other sectors, opened its first-ever global research and development centre in India, in Pune. Apart from India, the family-owned company has other R&D ...
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On March 19, Germany’s 838 million euro (Rs 6,405 crore) Marquardt Group, a leading global manufacturer of electro-mechanical and electronic switches and switching systems for automobiles and other sectors, opened its first-ever global research and development centre in India, in Pune. Apart from India, the family-owned company has other R&D centres in the USA, Germany, Romania, and China.
Spread across 25,000 square feet, this all-new R&D centre will employ around 80 skilled professionals under phase one, and will scale up to 200 employees within next five years. According to company officials, having recruited as many professionals at its Pune-based R&D centre in the near future, this will become the largest R&D centre for the Marquardt Group globally
The new facility in Pune will focus on all three areas of development ranging from software, hardware and mechanicals. Other than the ongoing projects, say company officials, the focus will also be on people development, which will include intensive technical and process trainings, monitoring project responsibilities, mentoring and team management skills. This strategic move aims at a long-term goal of the company, which sees stable growth in the coming times.
While the company has been present in India since 1965, it forayed into the automotive products segment in 2008, with increased engagement in the industry from 2013.
According to Ran Bahadur Singh, CEO, Marquardt India, “The company will invest close to Rs 12 crore over the next 30 months in India to set up this state-of-the-art facility. We have a manufacturing facility in Mumbai, which has enough capacity to locally produce the products for passenger cars and commercial vehicles.”
TATA MOTORS ORDER IN THE BAG
Dr Harald Marquardt, CEO, Marquardt GmbH, revealed that “we have recently bagged an order from Tata Motors for providing them with passive entry passive start systems for their upcoming models. Within the order, we are developing keys, control units, antenna, door sensors, electronic steering lock and a start-stop button. We will start delivering these products to them in the third quarter of 2016. This order from Tata Motors marks the largest order for us from India so far.”
Talking to Autocar Professional, Marquardt disclosed that “this (order from Tata Motors) is a double-digit million euro order, and the first supplies will made to them from China. Last year (CY 2014) we grew by 17 percent YoY, and we hope that with our current order book globally, we will be able to grow even better.”
According to the statement issued by the company, the order from Tata Motors has made the Marquardt Group even more bullish on the Indian market and it is considering further investments in the coming years while also actively scouting for more orders from OEMs in the country.
The company is known for primarily developing and supplying products for premium cars. It is a 100 percent supplier to all Mercedes-Benz and Audi cars, which currently use keyless-go systems, and also to a number of models of BMW, Mini and Chrysler cars for specific features.
Now the company foresees a number of premium features percolating down from the luxury car segment to sedans and hatchbacks over time. “This is bound to happen because buyers are evolving and they demand premium features in small cars. Also, growth is where the volumes are. We will be able to maintain profitability if we tap volumes, as we will achieve economies of scale. For example, our studies say that India will have more passenger car registrations in 2015 than in Germany or Japan. Moreover, we are evolving in terms of new innovations and 10 percent of our annual sales are invested back into the R&D operations,” said Dr Harald Marquardt.
The German supplier has a proper product strategy for the Indian car market wherein it is targeting the demand for keyless go systems, steering wheel switches and other operating components.
It is to be noted that the company has its footprint across 14 locations (in 10 countries) worldwide and employs more than 7,000 professionals. The automotive industry globally contributes to nearly 84 percent of its overall business.
With its latest move to design and develop products in India, the Marquardt Group is yet another foreign player leveraging the Make-in-India mantra.
Q&A WITH DR HARALD MARQUARDT, CEO, MARQUARDT GMBH
Your association with India and the local automobile industry spans more than a decade. What are the changes you see in this industry now?
We see many more new cars, a wide variety of them manufactured by many different carmakers here now. We see different segments expanding. We see adoption of higher standards, products becoming more competitive with time. I think that the passenger cars in this market are extremely competitive, much more than they were a decade ago, and I completely support the need for competition.
If there is no competition, why would any company evolve in terms of technology and value addition? For example, if some company manages to offer a keyless device for cars with the same quality as we do at half our prices, then we need to go back to the drawing board, re-design and work hard to evolve and offer better features.
A number of foreign OEMs and suppliers say that if you survive and make profits in India, you can do that anywhere in the world. Would you also say the same about this market?
I won’t say entirely. Because I believe that there are other markets also which are as competitive as India. May be in a way this is right but I believe that every single market has its own requirements.
If I compare the Indian market with Russia’s, that is some sort of South American market. So I would not say that the Indian market is more difficult than those markets.
Do you mean that in terms of cost competencies?
I mean it in terms of getting access to the customers, getting reliable contracts in place and a number of other factors. But, I must tell you, there is no free lunch in the European market. As you known, market prices have come down so much for these type of products (products similar to Marquardt’s global automotive portfolio), that I do see that higher volumes would drive the growth.
From time to time, customers like to have additional features, and then it’s about technology and innovation, and not only about the costs.
You are a supplier to a number of OEMs in India. How do you see Indian OEMs opening up to new innovative technologies in terms of costs and additional value?
This varies dramatically, from some OEMs being unresponsive at all to some being absolutely open to embracing new technologies.
You make products for premium cars. Now (after the Tata Motors business) you are making products for regular cars. How are you balancing your profitability?
You don’t always have to develop a new product. There can be offshoots from existing (premium) product platforms. For example, if we made an advanced car key for a particular model then the same platform can be used for making a similar (yet different) key for a different car model.
If you utilise a basic product design for developing an all-new product, then you can cut down your costs substantially. Secondly, regular cars fetch volumes, which is great.
What are the new innovative products you are working on that will majorly kick off in the near future?
There are many but mainly I would say the battery management system for hybrid and pure electric cars and touchpads for infotainment systems. Also, I believe that the keyless-go system will catch up in volumes.
You have some direct competitors in India which have grown inorganically, by acquiring other entities. What strategy do you have to compete with them in this market?
I believe that we develop our own products and technologies and our customers know that. We don’t need to acquire any company to learn or get access to new technologies. We are proud of our organic growth.