Mahindra & Mahindra, India?s most diversified auto manufacturer of tractors, trucks, cars and two-wheelers, is planning to use more plastic and less steel in its vehicles, a move aimed at reducing vehicle weight by up to 2%. M&M president (automotive and farm equipment sector) Pawan Goenka told FE that the move was part of a long-term strategy.
Currently, plastic constitutes around 15% in M&M vehicles, which will go up by around 5%. In contrast, steel usage currently is 40%, which will yield space to plastic.
The immediate trigger behind the move is the recent floods in iron ore-rich Australia and Brazil, which disrupted supplies and pushed up steel prices by 20-25% since January. In order to keep input costs down, M&M had to take a fresh look at its sourcing model. Analysts said the move could reduce the weight of leading M&M brands like Scorpio and Xylo by 5-7 kg.
This is only the second instance of an Indian auto manufacturer adopting a light-weight programme. In 2008, Maruti Suzuki had started a ?One Gram One Component Programme? aiming to reduce weight of components by 1 g. The move brought down the average weight of a Maruti car by up to 2.5 kg, saving the company around R10 crore per year.
?We are reducing steel content as part of a long-term strategy. It is a step in the right direction,? Goenka said. He said the change should not be merely seen as a policy to hedge risks against volatile steel prices but an overall attempt to increase efficiency. ?This is not going to drastically reduce steel content. Going in that direction has other benefits that includes light-weighting of the models as well,? he added.
Analysts welcomed the company?s move.
Deepak Jain, assistant vice-president of brokerage house Sharekhan Securities said: ?Typically, an SUV like a Scorpio would have up to 40% steel content and plastic’s share is around 15%. Since plastic has roughly half the weight of steel, any reduction in steel content would reduce the weight of the car,? he said. Jain said the reduction could be in the range of 5-7 kg. Currently, Mahindra Xylo’s gross vehicle weight is around 2,475 kg while Scorpio’s is 2,610 kg.
Abdul Majeed, leader of automotive practice at PricewaterhouseCoopers concurred, saying the would also raise fuel efficiency. ?OEMs would have to look at alternative materials to reduce weight. This is going to be the key since a light vehicle would consume less natural resources thereby adding to overall efficieny. Also, a lot of innovation is happening around plastic to make it more tough,? he said.
?M&M can look at various options to increase plastic content,? Majeed said. Jain added: ?Most logically, the company can increase the plastic content in the doors and the hard framework of the seats.?
Another Mumbai-based commodity expert said: ?The price of coking coal has increased over 25% to around $250 per tonne. OEMs have to look at commodity substitutes or else prices of cars could rise sharply.? In fact, SIAM has also cited rising input costs as the major challenge for the automotive industry. Maruti Suzuki which declared its Q4 results last week said its raw material prices had increased 24% in January-March to Rs 7,598 crore from Rs 6,127 crore in the same period last year.