AVL India taps R&D business from OEMs

AVL India is eyeing projects for helping build technical centres of engine manufacturers. It is hopeful of bagging a key order from a well-known engine manufacturer, part of a three-year contract. This would involve providing infrastructure and testing equipment and also training manpower.

According to Michael Blickle, executive vice-president, Instrumentation and Test Systems, AVL List GmbH, the local subsidiary will provide parts of the test beds but most testing equipment will be sourced from Austria.

Also in the pipeline are orders from Maruti Suzuki for its upcoming powertrain facility in Rohtak. If the order materialises, AVL hopes to supply utilities and compressed air systems sourced locally or from international companies based in India. Besides, roller test beds that simulate the running of the vehicle can be brought from Europe.

Another order that AVL is keen to win is from engine manufacturer Perkins, which is setting up an R&D centre in India. Perkins is planning a large investment of an estimated Euro 100 million and plans to make large engines. Perkins also plans to service the global markets from India. Earlier, OEMs have made India a testing hub but stayed away from R&D. This move now to R&D is a shift in strategy to harness India’s low-cost structure and skilled manpower.

Working with M&M

Meanwhile, AVL is developing a full hybrid vehicle for Mahindra & Mahindra. M&M is believed to be developing a hybrid-diesel SUV with a three-cylinder, 1.4-litre engine downsized from its earlier 2.2-litre, four-cylinder configuration. The engine will be lighter than the previous version and is targeted at India and Europe.

M&M has already developed the engine for it in conjunction with AVL and systems like battery, e-motors, control systems for it are currently under development, says Shashi Singh, managing director, AVL India. The vehicle is expected to be on a new platform and AVL will handle engineering of the powertrain and hybrid systems.

AVL India has also started manufacturing its compact series of equipment. These machines are not popular in Euro 3 and 4 markets as they have fewer features even though they match the technical capability of the smaller and downgraded versions of equipment available in.

AVL also wants to make India its competence centre for its two-wheeler market worldwide as well as for CNG. It is also developing eco-friendly solutions for the testing industry. Two-wheeler electrification is expected to play a big role going forward, says AVL.

Among the upcoming trends in the commercial vehicle segment, five- to six-tonne trucks and buses using three-litre engines are expected to switch to 5, 8 and 11-litre engines for long hauls. The LCV segment is expected to consolidate further, providing more growth opportunities for players like AVL. As emission norms become more stringent, new technologies for NOx reduction to meet Euro V emission norms will be required such as selective catalytic reduction. Diesel particulate filter, currently used in Europe, will also enter India. It reduces particulate matter in diesel and regenerates exhaust aftertreatment.

Meanwhile, AVL India has been able to maintain a 10 to 20 percent year-on-year growth in all segments clocking a turnover of Euro 55 million. Its testing division contributed 60 percent of the revenue. AVL officials believe that in future there will be greater focus on petrol engines in cars as companies like Tata Motors and M&M shift to petrol even in the light commercial vehicle segment.

Singh attributes it to the strong anti-diesel lobby at the Centre and also due to the expected narrowing of price differences between petrol and diesel should subsidies on diesel be lowered. Petrol engines of 1.2-litre capacity for smaller vehicles and ranging upto 2-3 litres with both three and four cylinders are expected to be in greater focus in the future.

With the Bureau of Energy Efficiency (BEE) pitching for fuel consumption labels and carbon dioxide reduction, norms from Europe expected to applicate here in future, the next step will be to downsize engines to increase powertrain efficiency, to lightweight the vehicle and reduce emissions not possible with large engines. Alternately, the automotive industry can opt for hybrid cars that can meet CO2 targets like in Europe.

Range extenders in hybrid vehicles to boost driveable distances are prevalent in Europe and are expected to come to India, says Singh. Pure electric vehicles, however, face hurdles in the form of battery costs. To skirt this, OEMs are fitting a small petrol or diesel engine in the vehicle so that when the battery charge reduces, the range extender boosts the car and recharges the battery in a hybrid car. But AVL does not foresee any future for hydrogen or fuel cells in India for the next 20 years due to the costs involved.

INTERVIEW MICHAEL BLICKLE, EVP, INSTRUMENTATION & TEST SYSTEMS

What is AVL’s roadmap going forward?

Globally, we have made significant increases in investments in overall engine technology development, but the infrastructure for OEMs needs to catch up and address many more different applications than in the past for either new engines or the same kind of engine families.

For us, this is interesting but the fact that AVL had the best year in 2011 in its history is because our global market positioning allows us to become the preferred partner of OEMs. We also see pressure on R&D departments which will increase their applications of engines especially in terms of CO2 reduction, fuel consumption and electrification that comes along with hybridisation.

For us this is a positive development as the more the companies go global, they will partner with us. Our instruments division is much bigger than the engineering division but our heart is still in our engineering business. We are the world’s largest producers of test beds with a marketshare of 28 percent; our nearest competitor is at eight percent.

Today we see a very clear global tendency in European OEMs to build R&D centres in India. While they build production capacities in China, they establish R&D centres in India due to intellectual property issues. For us, it will be important to align ourselves from Germany and France with India to make sure we are the preferred partner for projects in India. The global turnover of the instrumentation and testing business is worth Euro 600 million.

What are the challenges you face in India?

Our biggest challenge is the testing time from design to production, road testing and on test beds. We have the tools, software and hardware to reduce the time by over one year.

In which segment does AVL visualise potential for itself in India?

Depending on special projects, it is in the instruments side of the business.

Where does India stand in AVL’s global ambitions?

India is still relatively under-represented in terms of number of OEs compared to China which has about 90 OEMs. But India is important for us as we wish to be the preferred partner of Indian OEs.

How different is the Chinese market from India’s?

In China, OEMs poach skilled manpower from another and companies have no chance to develop their own organisational knowhow.

BMW and Porsche, which are the best in developing engines, have engineers who have worked with them for 20 to 30 years which helps builds organisational knowhow through individual knowhow.

In China, the average period of experience for testing equipment for an engineer is 16 months after which he is either promoted or joins a competitor. India has well qualified people but the market potential is small and infrastructure development is too slow.

SHOBHA MATHUR