Business trends can change quickly in developing markets, such as India, reflecting the pace of change in society. Matthew Beecham spoke to Mike Savage, chief engineer at Drive System Design about how the transmissions market in India is undergoing a period of radical change.
How does the market for transmissions in India compare with more developed markets, such as Europe and the US?
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The single biggest difference is the very high cost of fuel in India, in relation to wages. This drives a preference for manual transmissions because they are seen to offer better fuel economy and a lower initial purchase price than other transmission types.
Increasingly crowded urban traffic conditions are driving greater demand for the convenience of automated transmissions but the fuel efficiency penalty of conventional torque converter autos makes them unpopular. In the field of commercial vehicles, autos can offer extended transmission and driveline longevity by protecting against damage from abuse through careless or untrained manual operation, but buyers have traditionally focused on purchase price rather than whole life costs.
So is the market about to change?
The change has begun already; AMTs [automated manual transmissions] that combine the convenience of an auto with the fuel efficiency of a manual are being introduced on an increasing proportion of new models. The additional purchase price, compared to a manual transmission, is less than half that of a conventional auto.
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By GlobalDataWe appear to have reached a tipping point in demand, with AMT versions of new vehicles being announced every few weeks: the new Celerio from Maruti-Suzuki, with its AMT branded as EZ Drive, was one of the first to reach the market; Mahindra has launched the Quanto autoSHIFT, and Tata has announced that it will soon make AMTs available on all models.
Tata Motor's president of passenger vehicle business was recently quoted as predicting that every second car in India will have an AMT within ten years. A similar trend is appearing in the heavy vehicle sector where all the major Indian truck makers have AMT development programmes underway.
Do these changes threaten local manufacturers or provide opportunities?
Until now, local transmission and vehicle manufacturers have been locked into the compromises of using proprietary components and 'black box' control systems, over which they have no intellectual property rights. This puts them at a disadvantage when competing with imported products. However, as demand for AMTs increases, those manufacturers who choose to develop their own IP could turn the situation to their advantage.
Those companies that commit to acquiring the necessary skills to satisfy home market demand for AMTs would then have the potential to compete more effectively in overseas markets too, by providing products that are not only favourably priced but technically highly competitive. Software engineering, for example, is already becoming a strategic Indian capability with large Japanese and German transmission manufacturers sufficiently confident to outsource software from the more experienced Indian suppliers.
Do local manufacturers face any particular obstacles?
Having made the transition from supplying on a 'make to print' basis to full Tier 1 status, Indian transmission suppliers must now master the issues surrounding control system engineering. Local OEMs face competition from joint ventures supported by know-how from overseas partners.
Though the Indian automotive industry has considerable software expertise, direct experience of engine and transmission control systems is less common. Relatively few engineers in the region possess the practical calibration experience required to structure a suitable development programme and deliver a robust and validated solution.
This has created a demand among the more forward-looking companies to grow their capability through technology transfer from independent specialist engineering consultancies, such as ourselves. By acquiring not only the mechanical design expertise relating to AMTs, but also the related control and calibration skills, they can develop greater commercial independence, technical autonomy and solutions that are individually optimised for their specific applications.
We can see the long term future in heavy trucks but will AMTs survive in passenger cars in India or be replaced by DCTs, as happened in Europe?
The remainder of this interview is available on just-auto's QUBE Global light vehicle transmissions and clutches market- forecasts to 2030
