ZF Services, the after sales service division of ZF, plans to focus on expanding its passenger car business through an entirely new network, said, Bernd Grasser, General Manager & Head of ZF Services India. Developing the passenger vehicle business comprises the company’s next big target in the Indian market, for which a new distribution system will be installed.
The division is already supplying products to companies such as BMW, Mercedes and Volkswagen, which either import or assemble models in India. In order to fuel further growth, ZF Services intends to cater to Indian, Korean and Japanese OEMs in the market. Grasser expects the passenger car business to gain more visibility in the next couple of years and about five years from now for the business to become established.
The business in India is mainly dependent on the commercial vehicles segment for now. Buses in particular are offering a rapidly growing business to the division and ZF Services already has orders from some of the largest private bus fleet operators in India. In order to develop the bus business further, the division is talking to or planning to talk to some of the state-run-transport corporations for their fleet maintenance and related services.
Grasser talked about the importance of India as a market with huge potential, but also highlighted the unique challenges associated with the market. Some of these are unique demands in terms of pricing and technology. A company better known for offering higher value, ZF needs to adjust and strike a balance to suit Indian conditions.
A major recent step taken in order to quicken the growth was the setting up of a new warehouse in Pune, Maharashtra. The facility became operational just a few months back and the availability and replenishment cycles are now getting in line with the desired levels. The division is also looking at developing its dealership network in order to reach out to more customers across the country. Localisation too will undergo an increase but will include products, which aren’t a part of the present portfolio and are required for India. For the other components, the plan right now is to continue with imports.
Quite importantly, the business is expected to grow at a healthy pace in India as it’s well-integrated with the growth of the group business in the country. The Services division established an office in Indian in 2010 and has witnessed a steady growth in business since then. In the calendar years 2011 and 2012, the division grew 38 %.
ZF Services is responsible for offering a lot more beyond parts availability. This includes offering maintenance services, which is crucial for the growth of the group business. The strategy is to not flush the market with products and instead focus on high-quality products. This will allow ZF Services to distinguish itself from the competition and compliment the growth of its group business.
Talking of areas of improvement, he mentioned that Government policies in terms of infrastructure development will also play an important role in the sector’s growth. Brasser added that a change in taxation between states is essential as the present scenario has a lot of uncertainties attached to it. The presently exploited grey areas aren’t helping suppliers in any way. Despite this, the growing population and its demand fuelled by a growing private sector will continue to generate growth for businesses in the long-run and continue to project India as a long-term market for companies worldwide.
Text: Arpit Mahendra