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BW Businessworld

The Affordability Factor

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Auto Expo 2012 looks all set to be about new launches across segments. The other crucial trend would be the industry's drive towards making the vehicles affordable. Affordability means cheaper vehicles, durable components as well as better fuel efficiency.

The Bosch Group's commitment towards investing Rs 2,200 crore over the next two years in its India unit – a low-cost innovation centre — is a step towards the principle of affordability. "Making Bosch automotive products accessible and affordable everywhere is one of our central aims and we see our India team contributing significantly on this front," says Bernd Bohr, Chairman of the Automotive Group, Robert Bosch GmbH.

With cut-throat competition in the auto industry, where better vehicles at lower price tags have become the norm, manufacturers have been constantly trying to optimize their resources and improve processes. However, technological advancements and innovations hold key to the future. 

Bosch's investments will be used for such technological developments including cost reduction, innovation in fuel delivery systems that allows for lower emissions and fuel consumption, and low-cost safety systems like ABS. 

"We are looking at 20-30 per cent cost reduction in product development," says V K Viswanathan, managing director, Bosch India.

With focus on fuel economy, the company will invest Rs 700-800 crore of the total amount om capacity expansion for diesel technology at its Nasik plant. The plant can currently produce 7-8 million fuel injectors. 

It is also constructing a new plant in Ahmedabad - expected to be functional by first quarter of 2012 - that will produce hydraulic valves, power units, control blocks and cylinders.

Viswanathan believes that the demand for diesel will pick up. "Diesel is here to stay; it's here to grow, not just from the difference between petrol and diesel … but also because of other inherent characteristics – suitable for Indian conditions," he adds. For alternative fuel technology, Bohr sees opportunities for the plug-in hybrid technology, while expecting the all-electric driving to be possible much later.

Demand for small, low-cost vehicles will grow as emerging economies develop, says Bohr. Bosch is the only manufacturer of ABS systems in India. And as an initiative towards affordable safety technology, it has also developed a low-cost ABS system for two-wheelers that we can see on the TVS Apache RTR 180. 

The automotive group added 4,000 associates in 2011, taking the current strength to 25,000, and expects to add 7,000 more associates by the end of 2013. 

The investment also comes at a crucial time, when the ‘India growth story' is losing some of its sheen. The automakers continue to be quite positive. "Bosch expects the number of cars per 1,000 people to rise to 35 by 2025, up from 12 per cent in 2012," says Bohr.