French ancillary supplier, Valeo will start a sixth plant in India, a clear indication of its faith in the country’s automobile market.

“The last time I was here was two years ago and today, I am impressed to see more premium cars,” says Jacques Aschenbroich, CEO of the Euro 12 billion company. He was in India to inaugurate a thermal systems factory at Sanand, Gujarat, where over 60 per cent of the output will be earmarked for Ford’s car plant set to go on stream in a couple of months.

Valeo’s four business lines across its India plants include air conditioner components, thermal systems, visibility systems (lights and wipers) and powertrain. After nearly two decades here, it is now exploring the option of bringing in its comfort and driving assistance products.

Evolving market Aschenbroich believes the market is growing both in range of products and an evolving customer base. “This is something we are looking at very closely along with our customers,” he says.

Valeo’s comfort and driving assistance is a high end segment driven by sensors, radars and cameras. According to Aschenbroich, this niche segment may grow quicker than expected which explains why the company is looking at it very carefully. “I think we are at a kind of changing point in the Indian market despite knowing that customers are value-driven, probably more than in other markets,” he says.

And even while the last couple of years have seen a host of car launches across segments, Aschenbroich would rather adopt a wait-and-watch attitude to see how long they last in this competitive market. The bigger plus though is that India is fast becoming a hub for exports which will translate into higher volumes so long as costs continue to be kept in check.

Looking east China is Valeo’s largest market where premium automobile brands account for a significant share. India is more segregated in contrast with premium, mid and low-range and competitive/value cars.

And even while it still trails China in car sales, Aschenbroich is confident that growth will pick up pace. Eventually, it will catch up with China which is expected to grow at about 7.5 per cent annually.

Valeo’s decision to focus on R&D and invest in Asia and other emerging markets is paying off. “We have lots of new products coming into the market. Nearly 30 per cent of the order intake is from products that hit the market in the last three years,” says its CEO.

China, though, has been the key growth catalyst and is even ahead of France for Valeo’s overall business. More than 15,000 people are employed in China across 26 plants. “That was yesterday, it is probably 27 today,” quips Aschenbroich, a clear reference to the scorching growth in the world’s largest automobile market.

Valeo also hopes to enter Indonesia soon as part of its strategy for Asia which contributes to 27 per cent of overall turnover and 40 per cent of orders. Europe is still ahead at nearly 50 per cent but was 75 per cent only six years ago when Asia was just 12 per cent. The changing global dynamics is something Valeo is preparing for in the coming years.

The writer was in Sanand at Valeo’s invitation

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