ZF India mulls postponement of CV transmission line to 2010

ZF India mulls postponement of CV transmission line to 2010

Diversified component maker, ZF India, a wholly owned subsidiary of Germany-based ZF, is likely to join the growing list of Commercial Vehicle (CV) manufacturers and suppliers opting to adopt a wait-and-watch policy due to the downturn in the domestic CV sector. With CV production hitting the bottom in the country, the company is now mulling over delaying the launch of its facility for CV transmissions and axle.

A company official indicated, on condition of anonymity, that given the current downturn in the CV segment in India it would not be the appropriate time to kick-off a greenfield project and the plan for a dedicated local facility for CV axles and transmission is most likely to be put on back burner, for another year.

ZF India, to localise production for its key CV customers in India and take advantage of the low-cost supply base, was in the process of setting up two facilities for axles and transmission near Pune, one each for the CV and the off-highway segment, along with an international purchase office for sourcing components from Indian suppliers.

While, the facility dedicated for the domestic CV segment is unlikely to come up before the middle of next year, the company, however, is going ahead with its plans for setting up the transmission systems facility for the off-highway segment as well as the global sourcing office in India. The facility for off-highway vehicle segment is likely to go on stream by September this year, while plans for the global sourcing office, although on track, may be significantly curtailed from its initial estimates.

Refusing to give out detailed investment figures, company officials, in an earlier interaction with Auto Monitor, had indicated that a similar transmissions and axles facility for off-highway or CV application would require investments to the tune of €20 million.

Future Plans

Established last year to localise production of its nine-speed transmissions for heavy trucks and transmissions and axles for backhoe loaders, ZF India also plans to export transmission components to its other locations worldwide. The company is also likely to contemplate introducing other products in the future, depending on the growth and evolution of the domestic market.

The German transmission major sourced components worth around €30 million last year and the level may only grow as more foundries come on stream and domestic market shows sign of improvement in the near to medium term. The company is planning to source forged components mainly related to heavy-vehicle transmissions.

Currently, transmission systems for its key domestic CV customers, including Tata Motors, AMW, Ashok Leyland and Volvo, are imported from ZF’s facility in France.

ZF caters to construction equipment, automotive and material handling industries, most of which have shown significant growth over the last few years.

The company already has presence in India through its various manufacturing facilities for steering components, chassis and suspension parts. The group’s Indian facilities include ZF Steering Gear India (near Pune), Bharat Gears (at Mumbra, near Mumbai) and Sona Semic Lemford Components (at Gurgaon, near Delhi).