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The Tata Nano may not have exactly set the market afire but German auto supplier Bosch, which was associated with the project, continues to be upbeat on the global prospects for low-cost cars.
“We are still optimistic as far as low-cost vehicles and people's cars are concerned on a worldwide scale. We are convinced there is a market for these kinds of cars in India, China, Vietnam and Africa in the price range between today's motorcycles and cars,” Dr Bernd Bohr, Chairman of the Automotive Group and Member of the Board of Management, told Business Line .
Cost innovation
From his perspective, the small car segment is continuously increasing on a global scale thanks primarily to the growth in emerging markets.
To that extent, the worldwide average car is getting smaller and cheaper.
“As a global supplier, we must have products available for this small car segment. Having a challenge like the Nano is a sort of a catalyst for what we call cost-innovation. This means taking existing functionalities (like engine management) to a completely different cost level,” Dr Bohr said.
For the Nano, Bosch worked on the gasoline system. This was a project driven out of India with important contributions coming in from the company's network of engineers in China and Germany. Bosch is now continuing this effort with diesel.
A case in point is the Mahindra Maxximo whose two cylinder common rail system will fit as comfortably in a low-cost two-cylinder vehicle. The next step would involve safety systems and other initiatives like electric power steering.
“All this is preparing us for a growing market segment of low-cost cars. It is important to have this experience and a product line-up available for other upscale markets,” Dr Bohr said.
Strong bets
India is tipped to be among the three top automobile markets in the next decade after China and the US. Bosch believes it is, therefore, important to have its position carefully laid out as a premier global auto supplier.
However, the uncertainty on diesel pricing is causing “some uneasiness” and the company believes it is high time the Government puts in place a mid- or long-term policy perspective.
Apart from India, Bosch is upbeat on Vietnam, where its two-year-old plant is already into its third expansion for CVT (continuous variable transmission) belts. Likewise, Indonesia promises plenty and the company believes that with its strong India foothold, it can leverage economies of scale in ASEAN effectively.
Growth hopes
On the global slowdown, Dr Bohr said it was not going to be easy to make a forecast for 2012 with all the uncertainty in the financial markets. “In our business plan, we see a moderate growth with global car production growing between three and five per cent. We see this on the one hand coming from emerging markets and also think America is going to perform pretty well this year with some growth,” he said.
Europe, though, is expected to be almost flat while Japan, which had a traumatic 2011 with the tsunami, could get back to normalcy this year. Should this happen, it will translate into 1.5 per cent production increase on a global scale. “There will not be a huge crisis in 2012 though we never know what could happen in the financial markets,” Dr Bohr cautioned.
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