The Indian automotive industry is in a delicate state. There have been several crucial changes in recent times, from the implementation of BS6 norms to the push for EV adoption. Apart from the auto manufacturers themselves, automotive component suppliers are also facing difficult times. With the first wave of the coronavirus and the lockdowns, the industry as a whole is facing difficult times.
However, with such times, companies are looking at innovative ways to overcome the hardship. To understand the market better, Express Mobility reached out to Venkat Subramaniam, the Director of Automotive Business at SKF India.
The pandemic affected the auto industry big time. Is there a set plan if such an incident occurs again?
Undoubtedly, the pandemic severely impacted the Automobile sector. However, the sector has been experiencing prolonged negative growth for quite some time now. The current decline of the automotive industry can be attributed to various factors. Rising fuel prices, slowing income growth, and confusion around BS-VI emission norms are causing a general slowdown in consumer confidence. Also, in the last few years, the size of the organized pre-owned market has expanded significantly, impacting new vehicle demand. Currently, semiconductor shortages are disrupting vehicle sales, and this may reverberate all through 2022.
At SKF, we are focused on gaining share in the automotive segment specifically in two-wheeler and tractors and will continue to partner with customers to meet their growing needs. For example, we recently introduced three new Automotive Aftermarket products including Chain and Sprockets for two-wheelers, Timings Belts and Steering and Suspension system for four-wheelers to address customer needs for improved performance and durability.
What strategies have proven to be successful for SKF to overcome the crisis last year?
At SKF, the effects of the second wave of COVID-19 have not changed our strategy and we remain confident about the growth opportunities ahead. We will continue to focus on executing our strategies, sustaining operational efficiencies, maintaining customer centricity, and ensuring cost discipline leading to a strong financial performance and increased shareholder value.
Looking ahead, we see digitalization as an enabler to implement and deliver proactive solutions and position SKF strongly for long-term growth. For example, a major trend is the aftermarket industry leveraging digital and e-commerce technologies to reach out to customers. We recently introduced our e-commerce portal — emarketplace, that hosts a wide range of products and solutions, and provides a reliable and seamless online experience to our existing and new customers. All the automotive aftermarket retailers, mechanics, and fleet owners will benefit from this wide range of products and solutions.
Similarly, the electric vehicle (EV) segment is gaining a lot of momentum. It is, therefore, imperative for OEMs, suppliers, and dealers to be prepared to ride this change brought in by electrification. At SKF, we’re ready to support customers with solutions and design alternatives to reduce overall system power losses and therefore maximize electric vehicle operating range per charge. We’re working alongside our customers to ensure that bearings are fit for the future with improvements in performance, efficiency, and reliability.
What are some measures that the auto industry needs to take if a situation like 2020 (pandemic, lockdown) occurs again?
There are few things which are common for all sectors and specifically so for the automotive sector. First and foremost, companies must focus on de-risking its supply chain. Having a constant engagement with suppliers will help in a quick ramp-up as the market begins to recover, minimize costs and optimize manufacturing and distribution.
Secondly, given the new buying behaviours of customers, it’s important to stay connected with customers digitally. Companies will have to rethink the sales model by embracing digital channels, as well as considering direct sales models.
Thirdly, to avoid challenges of labor shortage and productivity losses, automotive OEMs and part suppliers must focus on strengthening their digitalization journey and bring in more automation, connected technologies and mechanization. Lastly, it’s imperative for the automotive companies to engage continuously with consumers by inventing new and innovative ways to enhance the engagement.
What are some of the setbacks that the auto industry is facing in the path of EVs?
One thing is certain that EVs are the future. Though they currently account for a relatively small part of the market, demand is building fast for EVs. Right from inadequate charging infrastructure, pricing differences between electric vehicles and ICE vehicles to range anxiety, finance options and low awareness amongst consumers, a lot needs to be done to push the adoption of EVs amongst consumers.
What technologies do you think that India lacks to electrify commercial vehicles?
There are two major areas that we need to consider. First are inadequate charging stations. Typically, commercial vehicles average 300 km per day. With just 1,800 charging stations in India (as per Society of Manufacturers of Electric Vehicles), the EV option for commercial vehicles does not look viable. While conventional vehicles can be refueled at petrol/diesel stations, such regularized infrastructure is not yet available for EVs.
Second is the high price of EVs. Currently, EVs do not make a good value proposition from a total cost of ownership perspective. Battery being one of the most important components in electric vehicles, it is very important to have local manufacturing capabilities to reduce the total cost of the vehicle. While the government is helping in building the required infrastructure, more efforts are required in terms of using old batteries and using more efficient technologies to encourage EV adoption.
What are some of the technologies/innovations that SKF has integrated towards bearings for EVs since they need to withstand higher torque forces (compared to ICEs)?
We are investing in new technological developments and adapting or redesigning conventional bearings. Overall, we have a portfolio of innovative solutions that enable a robust and efficient E-powertrain drive. Many leading OEMs in Asia, Europe, and North America alike are trusting SKF bearings and solutions as part of their electric drivetrain designs. SKF hybrid Deep Groove Ball Bearings (DGBB), for example, use ceramic rolling elements and steel rings. Bearings of this type offer improved high-speed performance and best-in-class electrical insulation characteristics, making them the premium choice for high-performance EV powertrains. In addition, SKF is also developing application-specific solutions to mitigate the risk of current leakage at the system level and to protect the entire EV transmission.
In your perspective, how can policies be made better by the government to favor EVs and their penetration?
The government is encouraging EV adoption and aims that by 2030, EV sales should account for 30 percent of all new vehicle sales. So far, the impact of EVs on the manufacturers across the automotive value chain has been limited, but as the government brings in stringent regulations and policies (FAME 2 and PLI) and more people make the switch to electric vehicles, the shift may be more sudden than we expect. It is, therefore, imperative to focus on supply-side measures that include the manufacturing of critical components of EV technology.
Several states have come up with their own EV policies that have been designed to incentivize buyers as well as OEMs. However, there is a need to harmonize policies and focus on a uniformed long-term policy to develop confidence among automobile manufacturers.
Similarly, apart from policy, infrastructure is also important in determining the ultimate viability of electric vehicles. The government needs to speed up the building of charging infrastructure for India to move ahead towards faster adoption of electric vehicles. Most importantly, key stakeholders like automakers, battery manufacturers, suppliers, dealers, and energy companies need to collaborate to pave the way for EV growth in India. There is value in partnerships and alliances as it will give a thrust to the charging infrastructure and address the issue of range. Another important criterion is to create a policy intervention to give financial support to the EV sector through concessional loan or government guarantee-backed loans to help in scaling up the EV sector in India.