Matthias Matic_HBS (C&S) - CopyContinental Automotive Brake Systems (India) Pvt. Ltd, a subsidiary of Continental, has recently relocated its hydraulic brake systems plant to a new production facility in Gurgaon. The plant’s new 7000 square metre production facility is capable of producing around 1.5 million calipers, boosters and drum brakes, to cater to increasing demand from OEMs. Matthias Matic, Global Head of Hydraulic Brake Systems Business Unit at Continental visited the plant recently. He spoke to T Murrali and J Srikant on the Indian automotive market and the roadmap for the company. Edited Excerpts:

Q: Let me start by congratulating you on moving to a new 7,000 sq meter plant, which will enable you to make 1.5 million calipers, boosters and drum brakes. What does it all mean to Continental globally?

Matic: Continental is supporting our global OEMs as well as domestic OEMs from the HBS plant India. We have now commenced direct export to South Africa and Eastern Europe and indirect export through our established customer base, to Europe and the ASEAN region. This plant will help support our global growth target and solidify our footprint in the region. The Indian market is catching up.

Q: Will this support the company’s intent to increase sales share from Asia?

Matic: Continental C&S division has decided to increase above 5% annual sales growth globally. Growth in Asia will play an important role to achieve our strategic target. The division C&S has decided that by 2017 we would like to achieve 33% of total sales in Asia. HBS, as one of the largest Business Units of C&S, has incorporated these targets and is very confident that we can achieve its fulfillment.

Q: How will this support Continental in India? Will this footprint expansion help you increase your business?

Matic: This new production facility will certainly help us serve our local OEs more effectively. With core processes involving machining and assembly of parts, we have additionally launched the in-house assembly of drum brake shoes. Further capacity and programmes will be added to meet the demands of global and local OEMs.

Q: Is the expansion based on the commitment for increased business from new / existing customers or an initiative to expand on your own?

Matic: Continental Automotive Brake Systems India began as a joint venture with Rico in 2008. It went on to become a fully owned subsidiary of Continental in 2012, delivering actuation, caliper and drum brakes to all major OEMs in India. For strategic reasons, until recently, we were based out of the Rico plant nearby. With the new production facility in Manesar, we are better able to support the growing needs of our local as well as international OEs. This gives us better control in order to manage our future, secure our capacities. Besides, it gives a strong signal to the customers that we are committed to them. These were the main reasons for moving into this new plant.

Q: From India you have been exporting to South Africa and few markets in Eastern Europe; are there new export obligations that fueled the plant/ capacity expansion?

Matic: For some of our customers, India is an export hub. Our customers (OEMs) are exporting our products to other locations. As their obligations to export increase, so do ours. In summary, we are keeping in sync with our customers’ footprint. Primarily, the export from India would be indirect through the vehicles exported. Then we will also be catering to Asian markets and South Africa. Our strategy is also to be in the region for the region. It is primarily to support the region first.

Q: Quality has become a hygiene factor long ago; where and how do you show the differentiation in products over competition?

Matic: First of all, quality is a key success factor and is one topic in which we would want to be in the market leading position. Second, the quality standards that we are setting are same as for any other region worldwide and it is our task to achieve them. Therefore, we invest quite some effort here in improving our quality standards. Having everything under one roof here helps us to bring all our competencies together.

We have a global presence and leading position in all major markets with all segments. Our global engineering network can support worldwide platforms and systems. The products are available for all market requirements, advanced and competitive technology, best in class technology, quality, and noise vibration harshness (NVH) performance.

Q: What is the driving force for you to develop new technologies that can take you distinctly ahead of competition?
Matic: We are addressing local needs and that is why we have a local R&D team here which is close to the customer and the market and able to understand the market needs here. Hydraulic Brakes Systems may not seem like an innovative area but Continental has very interesting new innovations e.g. Fixed-Type Caliper, Brake Booster generation III, the Electric vacuum pump or the Electric Parking Brake Caliper integrated in this area.

Continental belongs to the global leaders in every aspect of hydraulic brake systems and it was a strategic decision to stay within the business, while some competitors stepped out. We think it is important to have the system know-how, hydraulic and electronic brakes, ADAS, driving dynamic and sensorics. We consistently deliver new, optimized solutions for classic braking technology.

The Hydraulic Brake Systems Business Unit develops and manufactures wheel brakes, electric parking brakes, drum brakes, brake boosters, hoses, plus washer systems for automotive markets all over the world. For sure CO2 reduction and the request to increase robustness of components and systems is currently driving innovations. In addition Electric Parking Brake (EPB) innovations are driven due to interior reasons.

Q: How do you see the overall Asian markets and India in particular, evolving during the next five years?
Matic: Overall, we expect the Indian market to grow in the future. We are seeing in India a steady developing automotive market, not at growth rates that we initially saw but around 5% growth rate which we have forecast. In regard to components – EPB is the greatest growth potential for hydraulic brakes in the next five years. The focus in hydraulic brake systems is on short braking distances, durability and comfort. In addition to stopping and stabilizing a vehicle, another important function is to prevent it from rolling away while parked. Electric parking brakes are rapidly making inroads in every category of car and are becoming ever more commonplace.

Electric parking brakes offer great comfort and high-level safety with easy operation .The advantage of electric parking brakes is that they perform various assistance functions in conjunction with electronic brake systems to add safety and convenience. Moreover, they operate at the press of a button. Manufacturers also enjoy greater flexibility in designing interiors because there is no more a hand-brake lever to protrude into the passenger compartment.

The Electric Parking Brake embodies many functions such as Apply & Released via button Automatic Apply, Drive Away Release, Hill Hold. Compared with the conventional mechanical system which is hand operated, it provides many more comfort and convenience features to drivers.

Demand for Electric Parking Brake is already increasing in certain markets in Asia, with China leading this. Over a period of time, we hope to see this trend catching up in India.

Q: Under the Chassis & Safety division Continental makes several products while in India you are confined to calipers, actuation, boosters and drum brakes. Are there plans to expand product portfolio, can you give us the roadmap for your Indian operations?

Matic: In the future, I foresee that other business units out of Chassis and safety division would establish local production setups in India, depending on the business case. All products with the exception of Electric Parking Brake (EPB) and washer systems are available in India. We have not seen any demand for EPB from our customers yet. But, we are watching market requirements closely and will be ready to offer solutions when the demand arises.Today, in addition to brakes we already have a couple of other chassis products which are made locally. Sensors are a big part of the focus and we do have a factory. We also make ECUs for power steering. These are in addition to the HBS portfolio. Rest of products are based on the market needs and to a certain extent driven by regulation.

Q: Globally almost all the Tier 1 companies have made their growth projections based on the emerging markets – What is it for Continental?

Matic: Continental is one of the world market leaders for hydraulic brakes and is the only supplier covering the entire brake system. So far, the sales of Asia occupy 28% of the total sales of C&S division. Also C&S division has decided that by 2017 we would like to achieve 33% of total sales in Asia. The Asian market in total for us with our activities in India, China, Japan and Korea are key success factors as well and Continental has recognised this good setup in order to be successful in Asian region

Q: How important is India for the Asia growth strategy? Explain.

Matic: Continental wants to provide safe and intelligent mobility for everyone, no matter where they live and work. In view of globally available technologies, safety is non-negotiable! Scalable safety technologies offer improved road safety for all vehicle categories and in all markets.

Continental is working with domestic and global car manufacturers in India, on the basis of win-win strategy. We are localizing wherever possible, depending on the scale of the business.

We have now commenced direct export to South Africa and Eastern Europe and indirect export through our established customer base, to Europe and the ASEAN region.

With core processes involving machining and assembly of parts, the HBS plant has launched a localisation programmes for the in-house assembly of drum brake shoes. Further capacity and programmes will be added to meet the demands of global and local OEMs.

It is no doubt that legislation and globally agreed traffic safety targets encourage the rate at which these technologies are being installed and some of these safety technologies are still not mandatory in India. However, we believe that it is a matter of time.

Q: Continental has adopted a unique strategy ‘Local for Local’ to develop parts for emerging markets like India. How is it helping you to address the market?

Matic: Wherever it makes business sense, we do localize (in the market, for the market). It was with this intent in mind that the decision to manufacture HBS products in India was made in 2008. We have been able to grow our customer portfolio significantly since then as a result of being in the market and able to serve our customers locally. Today we cater to most of the OE base in India and are also helping them in their strategy to export cars and components from India. We have also continued to build our engineering competence in India in order to meet our customer expectations for global technical support. Further capacity and programmes will be added to meet the demands of global and local OEMs.

Q: In addition to this strategy what really helps you in making components at affordable cost?

Matic: A vehicle with an “affordable” safety system requires highly efficient technology that is tailored to the customer and regional expectations. Potential market leaders have to adjust their products and production processes accordingly. The utilization of engineering capacities in the regions also has a part to play, as does the localization of the entire value chain: regional marketing and development, best-cost purchasing at local suppliers and a lower degree of automation in production are of crucial importance.

Q: Where do you see opportunities for development when the expectations are more at a competitive cost?
Matic: Continental is a market and technology leader in the area of Hydraulic Braking Systems with a proven track record of several decades in this field. We supply world class products to practically all classes of passenger vehicles. With such a wide portfolio, we have the ability to offer both high performance and competitive components to serve the needs of our customers. With the MK C1®, the brake actuation feature, the brake booster and the control systems (ABS, ESC) are combined into a compact, weight-saving braking module.

Q: What has been the contribution from India in terms of research for the Chassis & Safety division of Continental? How do you see this evolving in the next five years?

Matic: In Continental, we have a dedicated R&D Centre, Tech Center India, which develops automotive technology and provides software services for Continental’s Automotive Group. In addition, we have dedicated engineering talent across our other locations in India, including the new HBS plant . Overall, we have around 850 engineers (including ODCs) dedicated to engineering work, spread across TCI and our other locations. Bangalore is an engineering centre for ADAS and there are plans to expand our R&D footprint here.

Q: Tell us about the short term and long term plans?
Matic: We are building up all competencies; our engineers are supporting engineering and testing projects for other locations. Further, we are using our test benches to support capacities for other Continental HBS locations.

Q: Are there any Patents filed from India?

Matic: We currently don’t have any patents but the contributions are more at the working level. We provide inputs into the central engineering team and tell them what is the market here in India and how we should design products for the market. This contribution should not be undervalued and it is absolutely key for global standards. The last 5 years have given us a good sense as to what are the production practices here in India. For example we find the machining equipment in India is really world class level and this is something that we have been able to offer to Continental.


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