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Bosch upbeat about India’s global role in new decade

Murali Gopalan | Updated on February 28, 2020 Published on February 27, 2020

Markus Heyn, Member of the Board of Management, Robert Bosch GmbH   -  Wolfram Scheible

Soumitra Bhattacharya, Managing Director, Bosch, and President, Bosch Group in India

Software competencies here are being leveraged to set up centres overseas

Bosch is betting big on India’s software competencies to help establish new centres worldwide.

“We rely a good part on the team in India to set up new software centres in other parts of the world. The country has already been helping Bosch worldwide in this field even though this is not so well known,” says Markus Heyn, Member of the Board of Management, Robert Bosch GmbH.

The Indian team played a key role in setting up these centres in Mexico and Vietnam. Naturally, Heyn has reasons to be pleased, especially when software will play a big role in the vehicles of the future. It is in this backdrop that India will have a big role to play for Bosch worldwide.

“In India, we have the added advantage of having the highest number of R&D engineers, mainly in software, besides powertrain, in the world after Germany,” adds Soumitra Bhattacharya, Managing Director, Bosch, and President, Bosch Group in India.

As he explains, there are three centres the Bosch global board has allocated for artificial intelligence and India is one of them. Be it Internet of Things (IoT), embedded software or AI, Bosch India is clearly among the lead movers.

“It is part of our ambition as a company to be a top-class technology provider. In this world, with a number of people needed for development of software, and a huge part of this being in India, it gives us a clear headstart over the others,” says an upbeat Heyn.

It is his view that the company already has the expertise in place to handle future challenges, and its people are already working on “things where they like to be part of”. As he puts it, attracting talent is not about monetary compensation alone but also lies in defining a clear goalpost as well as a clear idea of an individual’s contribution to the company.

India, in this backdrop, is well poised to play a bigger role for Bosch during the course of this decade, especially at the back-end, in competencies like electronics, software, R&D etc. “The transformation started early here and we are confident going ahead,” says Heyn.

Even while this is cause for cheer, he is also aware that these are not the easiest of times for the automotive industry. The coronavirus outbreak has pretty much paralysed the supply chain worldwide, thanks to the huge dependence on China. The slowdown across many parts of the world is not of too much help either.

The challenges this time around are also quite different from 2008, when the Lehman crisis threw everything out of gear. The period saw Chrysler sold to Fiat and General Motors reaching out to its Chinese ally, SAIC, for a lifeline. Likewise, Peugeot needed help from Dongfeng of China but things gradually began looking up for the world thereafter.

As Heyn says, compared to the world economic crisis, which was a tough rollercoaster rider where growth eventually came back “steeply again”, the industry is now facing something which is more sort of ‘L’ shaped. Typically, this means that flat growth will be the new order going forward.

Yet, it is not as if everything is doom and gloom. “On the other hand, I believe there are some essential drivers for growth in the future which are miles driven per person and miles of goods transported. If you look at these two for a minute and forget the numbers of passenger cars and commercial vehicles, then you get continuous growth, which is even accelerating,” says Heyn.

From that point of view, the translation into number of vehicles has to be considered in light of “how active is our transportation working”. As he explains, it should be counted as number of vehicles being in operation, which also means that there are many “which are not used very much”.

The segmentation of sales in automobiles, continues Heyn, should be viewed in the background of what is driving mobility demand which, happily enough, is still rising. At some point in time, there will be a pick up again but a host of questions will still need to be answered. Will these be vehicles alone or do companies have to look at the landscape from the viewpoint of the mobility ecosystem encompassing trains, public transport and so on?

Future demand

“We will have to see the whole picture and there you will see a demand for mobility in the future. How does that translate into vehicles sold per year is a separate question,” explains Heyn.

Bhattacharya then steps in to give an idea of how this is working in India. “We are trying to explore the scope to give solutions which will kickstart the industry but also keep our share,” he says. One example is ABS (antilock braking system), which is lightweight, affordable and innovative. More than one million vehicles have been fitted with the Bosch ABS in this short time.

Another example is the mandatory shift from the carburettor to the fuel injection system, where Bosch is doing very well. Finally, electrification is the next big thing, where there are exciting things happening in the two-wheeler space with Bajaj Auto and TVS Motor launching their new scooters.

“If you go into the niche areas, you can also play the game differently and still be extremely responsible,” says Bhattacharya. In the Indian context, it is also possible to be affordable while still maintaining the quality levels of Bosch worldwide with innovative solutions.

Heyn is listening intently and also puts in his perspective. “If you look at the technology content in vehicles, a space where we are very comfortable, that part is on the rise, which is good for us,” he says. By the end of the day, Bosch will leverage its competencies in technology to meet the new challenges in mobility.

Heyn drives home the point again that mobility solutions will continue to rise and these will not be in the form of cars alone, with “many relevant others” also to be looked at. It is quite likely that the future will see cars being driven more in fleet operations compared to private vehicles that could stay idle most of the time.

In such a scenario, the utilisation rate will only rise and renewal of fleet will mean buying more vehicles. Heyn believes that changing dynamics like these will only mean that companies will need to think harder in offering new options to buyers.

The future could also throw up queries on why cars are being bought — whether it is to do office work in the them which means greater focus on interior work, display screens, connectivity and so on that will have to be essential add-ons.

Tapping trends

“Since we at Bosch are about technology, we already know that innovation will revolve around areas like connectivity and so on,” says Heyn. The company is also constantly in talks with “people from outside” beyond the automotive arena to discuss these trends and give inputs.

When it comes to electrification, Heyn believes that it makes sense to start with two- and three-wheelers in India because “we believe it is a lot easier and affordable to electrify vehicles which are lighter as opposed to others”.

Any transition will come with some pain, which perhaps means that jobs could be lost since new skills will have to be learnt. “In the phase we are in, topics like re-skilling become important. If you offer opportunities and the right skilling programmes, there are lots of people who are ready to go into new roles,” says Heyn.

The initial adjustment period may take time for a new field/technology but if people work for a while there, they may just end up liking it. “There are capable people within Bosch and I am confident that the number of those transiting to new skills will be impressive,” he declares.

‘Global auto output will shrink in 2020’

Bosch expects global automotive production to shrink in 2020 for the third year in a row.

This year, the company is forecasting a further decline of 2.6 per cent to some 89 million vehicles worldwide – almost 10 million units less than in 2017. Bosch is expecting this level to remain constant over the next few years, and does not anticipate any increase in global automotive production before 2025.

It was precisely a month ago that this forecast was made, during the company’s annual results for 2019. Volkmar Denner, CEO of Bosch, also spoke of the future of mobility. “Tomorrow’s mobility will be not only electrified and automated, but also connected and personalised,” he said. However, he warned that the road to the mobility of the future presents the automotive industry with some major challenges.

First, irrational arguments about the car have stifled any level-headed, nuanced debate about road traffic. Second, the industry needs more time to manage the transition.

“Particularly when it comes to jobs, a process as fundamental as the transition to electromobility cannot be achieved overnight,” reiterated Denner. Third, the economic situation is exacerbating the need for structural change in the industry.

“The move to alternative mobility will not be the end of mobility – and certainly not the end of the car,” Denner said, adding that Bosch is still well-positioned in its quest to be a leading provider of mobility solutions.

“For the foreseeable future, the car will remain the number one means of transport – and has excellent prospects of becoming an even safer, more convenient, and more eco-friendly means of transport,” he added.

 

Published on February 27, 2020
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