Leading global automotive supplier, Magneti Marelli and Hero MotoCorp, the largest two-wheeler maker in the world recently inked a joint venture agreement for development of powertrain systems for the two- and three-wheeler market. Soon after the announcement, we got a chance to speak with Eugenio Razelli, CEO, Magneti Marelli for an insight into the scope of the JV, and the company's overall plans in India.
THE NEW JV
The newly-formed joint venture, christened Hero MotoCorp Magneti Marelli Auto Limited (HMCMM), has an ownership stake split into 60:40, with Hero MotoCorp holding the larger share. The main system to be manufactured by the JV is the electronic fuel injection (EFI), a technology which is yet to be adopted on a mass-scale in the Indian two-wheeler market. Razelli told us that two-wheelers without EFI will find it hard to meet emission norms beyond 2015, and by 2020 EFI could become a popular technology in the market.
HMCMM's production plant will be constructed at a yet-to-be-announced location by 2015. In the initial phase, both companies will cooperate on the design and development of solutions for motorcycles. The focus from Magneti Marelli's side will be to enhance the technical aspect of powertrain systems by adding electronic content to them.
Under the agreement, the JV will also develop and produce products in the area of electronic engine management, including the ride-by-wire technology, said Razelli. He added that since this technology electronically handles the power requirements of the engine, it optimises the operation in addition to laying the technical base required to enable future solutions for hybrid engines associated with the transmission to be fitted on two-wheelers.
Razelli told us that the company is focusing on small, light and low-cost solutions with high electronic content for India. He said that markets such as India and China offer good growth potential due to the high volumes. Also, having electronics on a motorcycle makes it easier to develop newer and efficient sub-systems such as traction control and tilt sensor, making the vehicles safer, a key requirement for many developing markets, including India.
Since the JV is open to two-wheeler makers beyond Hero MotoCorp, Magneti Marelli has a lot more flexibility in terms of developing new low-cost solutions. By 2017-18, Razelli expects the JV company to post revenues of about $ 80 mn, which could double by 2020.
Beyond the JV, Magneti Marelli continues to work on the Automated Manual Transmission (AMT) for the Indian market. We were told that the transmission technology could be commercially launched in the country sometime in 2014, in the A and B segment cars. This would make the technology accessible to the masses and further open up development possibilities. In the beginning, the AMT might be imported but will later be localised, said Razelli.
From the JV's perspective, Razelli said that the opportunities for growth of electronics are large and plenty in the two-wheeler space. Citing examples, he added that an ECU can be used to send information to the instrument cluster and similar to cars, smartphones can be used to manage certain features in a two-wheeler. Customers could also have the option of changing pre-loaded engine maps using their paired smartphones/ tablets based on their riding requirements. This could further improve the efficiency of two-wheelers.
Highlighting the importance of software in the electronic systems today, Razelli informed us that an advanced ECU has about one million lines of software data. The new infotainment system of BMW, developed by Magneti Marelli has 33 mn lines of data. To add perspective, the Windows 8 operating system consists of 35 mn lines of data!
The company is quite upbeat about the potential of electronics in India. Instrument clusters in present two-wheelers have transitioned from mechanical to electrical and the company already has a strong presence in this area through another JV. Human machine interface (HMI) is another area, which the company is positive about and had recently entered into a JV with Faurecia to develop advanced HMIs. This development though is more focused at the global market. Razelli added that with increasing environmental awareness and the integration of smartphones with vehicles, the automotive industry globally is experiencing a wave of innovation unlike the past.
Coming back to the Indian business, he told us that the Indian market presently contributes about four per cent to overall global sales and is expected to increase its contribution to about 10 % by 2017-18, translating into a two-fold growth. The factors and product areas mentioned above along with some more will play a vital role in the company's growth plans in the years to come.
Text: Arpit Mahendra