Visteon on Tuesday said the company is planning to hire 2,000 employees in India, predominantly in engineering, over the next five years.
Global automobile technology major Visteon on June 14 said the company is planning to hire 2,000 employees in India, predominantly in engineering, over the next five years.
In India, Hyundai is Visteon's marquee customer. The new Mahindra XUV-700’s widely acclaimed cockpit display is also a Visteon product. The company serves Stellantis, Volkswagen, Mazda, General Motors, and Renault globally,
Visteon said the Indian passenger vehicle market has begun displaying a proclivity for buying more expensive cars. The company said the trend makes a compelling case for expanding its market presence here.
"The average price of a car has gone up on account of an increase in technology, and the market is also pretty strong in terms of buying power," said Sachin Lawande, President and CEO of Visteon Corporation, in an exclusive chat with CNBC-TV18, "There is a distinct change in the minds of buyers who are willing to pay more for an experience."
While over half of India's car-buyers were "value-driven" around three years ago, according to Lawande, that spend-conscious audience would account for no more than 25 percent of India's car-buyers in the next half a decade.
"A bulk of the market — that’s 60 to 70 percent — is going to buy cars in the Rs 10 lakh to Rs 30 lakh range," he explained, "This will happen in a market of 3.5 units today that will hit 7 million units in the next five years or so."
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In light of these projections, the NYSE-listed Visteon plans to double its workforce in India, build new technology centres in Goa, Coimbatore, and Thiruvananthapuram, add another cockpit display plant, and chart out a roadmap to double its revenues from India.
'Investing $20 million in cockpit display plant'
"Our second area of investment is in manufacturing capabilities to serve the growth we are talking about — we are going to invest in a second plant in addition to the one we have in Chennai," said Lawande.
The second plant that Lawande refers to will come with the capacity of a million cockpit displays.
"Our plant in Chennai cost about $40 to $50 million over a period of time, and half that investment had to be made upfront," he said, “So the second plant will also be in that range, and see about $20 million of an investment in displays in cockpit displays."
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With more OEMs manufacturing premium-to-high-end products that support the appetite for better in-cabin experiences, Visteon’s potential market in India is expanding beyond just one or two names.
"As the market is moving upwards, India will account for a double-digit share in Visteon’s revenues," said Lawande, "Today the market’s contribution to Visteon’s revenues is about 5 percent. It can account for 10 percent of our revenues, which would be a fantastic target to achieve in the next five years."
For context, Visteon’s global revenues stood at $2.7 billion as of last year. The company has said it is expected to touch $5 billion by 2025. Its revenues from India alone total to about $200 million as of last year, which it expects to hit $500 million in the same period.
"We feel that we have enough business to already touch $400 million to $500 million in revenues from India,” said Lawande, “With the time we have till 2025, we have the wherewithal to hit this mark on the back of big orders."
'Supply crunch has played spoilsport to revenue growth'
A large chunk of these revenue projections will hinge on how well the company localizes its Indian manufacturing activity, since supply chain risks continue to weigh heavily on businesses across the world. Visteon is no exception.
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"Our revenues last year were depressed by 20 to 25 percent on account of the semiconductor shortage," said Lawande, "We have begun securing more supply and talking to several suppliers — so that we aren’t dependent only on a few — which have helped us grow our revenues from $2.7 billion last year to about $3.2 billion this year."
Building supply chain sources within India is crucial for Visteon’s manufacturing business, here. The localization levels for its Indian manufacturing business stand at an abysmal 15 percent today.
"Our target is to get that up to 50 percent in a five-year time frame,” said Lawande, “We are counting on government policy and support and the ongoing development of the prefab industry for smart-phones and tablets established in India that will help us find partners and avoid imports."
The increased focus on localisation and building home-grown a supply chain means that like most automobile manufacturers, Visteon expects the supply chain crisis to end by mid-2023.
"We already have enough business to hit $4 billion in revenues this year itself, provided we have enough supply,” said Lawande, “We are being held back on account of the supply crunch, but expect to see some improvements in the third quarter."
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