The global die casting market is projected to touch US $80 billion by 2022. The market is poised to grow at a CAGR of over 6.60 per cent during the forecast period from 2017 to 2022, according to market research and consulting firm Mordor Intelligence. Automobiles and auto components are two of the significant sectors that the die casting industry caters to.
If we analyse the Indian market reports state that the country is currently the world’s biggest two wheeler market as it sold 17.7 million two wheelers in the country, while China trailed at 16.8 million units. It is also the fifth largest passenger vehicle market in the world as sales cross 3 million. Several initiatives by the Government of India and the major automobile players in the Indian market are expected to make India a leader in the two wheeler and four wheeler market in the world by 2020. India has also become a global hub for sourcing auto components. This current scenario has changed the dynamics of the local die casting industry wherein industry players are making use of the latest technologies in order to stay ahead of the game.
Recently, the automobile market has also introduced the concept of electric vehicles. This has brought forward new challenges for the die casting industry. A specialist in the industry, Jayesh Kumar M. Rathod, Senior General Manager, Godrej & Boyce Mfg. Co., explains, “The die casting industry is at cross roads in India. Being a leader in the manufacturing space for the auto industry, it is experiencing a few obstacles owing to uncertain future of gasoline vehicles. I’m not sure if the die casting industry can maintain its prominence and viability in the electric vehicle (EV) era. Though there are news indicating that there will be more aluminium content (on kilogram basis) in the EVs but the big question to be worried about is will all the required parts be produced only through the die casting process?” For this purpose, new capabilities need to be developed and mastered for developing new types of die cast products that help in creating vehicles of the future.
Light-weighting vehicles are one of the innovations in this direction. Thin wall castings for light weighting of vehicles and structural parts to take the load by providing best weight to strength ratio also need to be mastered to remain in the competition. Rathod adds, “We also update ourselves on the latest technologies in the die casting segment such as blue light scanning, high level vacuum and squeeze technologies.”
The Government of India has introduced 100 per cent Foreign Direct Investments (FDI) into the auto and auto component sector. Due to this, many global companies have started establishing facilities in the country for manufacturing vehicles for the local and global markets. For instance, China’s biggest automobile manufacturer, SAIC Motor, has plans to invest US $1 billion by 2018, and is exploring possibilities to set up manufacturing unit in one of the three states of Maharashtra, Andhra Pradesh and Tamil Nadu. Korean company Kia Motors with an investment of $1.1 billion also intends to set up a greenfield car plant to produce 3.000 units a year. For Indian markets, BMW has plans to manufacture a local version of below-500 CC motorcycle, the G310R, in TVS Motor’s Hosur plant in Tamil Nadu.
In the electric vehicle segment too, many players have shown interest to invest in the Indian market. For instance, Suzuki Motor has plans to make electric cars at its factory in Gujarat. The company will also manufacture them for world markets. Hero MotoCorp also intends to join the EV space by investing Rs 205 crore (US $30.75 million) to acquire around 26-30 per cent stake in Ather Energy, a start up firm that specializes in manufacturing smart electric scooters. That is not all! Masayoshi Son, Chief Executive Officer, Soft Bank Group, has also stated that Ola Cabs may introduce a fleet of one million electric cars in partnership with an electric vehicle maker and the Government of India. With so many opportunities in store, there is a need for the die casting industry to upgrade its technologies and processes in order to ride high on the growth wave.
The government policy has also benefitted the industry as now there is an influx of proprietary sub-assembly suppliers to OEMs such as transmission majors, fuel injection systems, filteration systems and braking systems, thus bringing in more opportunity to the die casting industry. Rathod opines, “Tier 1 customers demand higher quality standards and stringent acceptance norms but at the same time they bring in a wealth of experience in achieving the required quality norms. Through this, the die casting industry enhances their competency and is also able to serve the overseas operations of these Tier 1 companies.”
There are also a few hurdles in the Indian die-casting industry such as severe shortage of trained manpower, challenging work ambience which prohibits the young generation from entering this industry, considered as a low cost part producer prohibiting investment in technological upgradation by promoters. Rathod adds, “The die making industry is facing challenges in the form of high import content of raw material that makes them in-competitive with currency fluctuation and supply irregularity. Also, owing to Free Trade Agreements (FTA) with Most Favoured Nations (MFN), the domestic die making industry faces severe competition with more experienced and matured die makers from these countries.”The government should undertake policies that promote and ease the hurdles of this sector.
The industry is transforming and so are its potential business prospects. With the rise in production of automobiles, auto components and the emergence of electric vehicles, the Indian die casting industry have their fingers crossed!