Will Indian auto manufacturers shift gears to aluminium?

Will Indian auto manufacturers shift gears to aluminium?

Aluminium use in automotive bodies is gaining traction in US and EU markets. The outlook for aluminium applications is also robust as auto Original Equipment Manufacturers (OEMs) embrace the metal on a wider scale thanks to its inherent strengths. But are their cousins in India geared up to ride the aluminium wave?

For now, aluminium usage in the auto industry is still a fledgling market in India. The industry, however, is making efforts towards weight reduction – a priority not just for conventional internal combustion vehicles but also for hybrid and electric vehicles in the near future. The Indian states of Andhra Pradesh and Maharashtra have been building aluminium intensive buses for the last two decades. Top OEMs like Mahindra & Mahindra (M&M), Tata Motors, Ashok Leyland and Eicher Motors are exploring possibilities to develop lightweight, energy efficient vehicles where aluminium is the metal of choice. Fleet lightweighting has gained currency with the advent of hybrid and electric vehicles where heavy battery packs have to be inserted into vehicles.

But since India is still a very cost conscious market for automobiles, the use of aluminium is moderate. The high cost of aluminium bodies is one of the major obstacles to its mass market-appeal, especially when compared to steel and cast irons. Since cost may be higher, the usability is currently limited to low-volume vehicles such as sports cars and heavy trucks. For example, if in developed markets small cars consume up to 140 kg of aluminium on average, India only uses 40 kg for a similar car.

In the Indian context, technology is a barrier too. There is a distinct lack of assembly line expertise in the automobile-manufacturing units. Aluminium is easy to bend on the assembly line, and its quirky metallurgy could mean that body shops will have a tough time replacing bashed-in sheet metal. What’s more, aluminium is more expensive than steel in its raw state. Converting it to usable sheet metal as  well as assembling it entails a cost premium of 60 to 80 per cent, a big enough factor to discourage automakers.

Initiatives by Indian producers and unlocked opportunities

Indian aluminium producers are weary of the flood of cheaper aluminium alloys imports used by the downstream players to supply end products to auto OEMs. Nearly 60 per cent of all the aluminium absorbed by the auto industry in the country is fed by imports. A near-term goal for local players could be to reduce this share to say 30 per cent over the next three to five years by improving the quality of their aluminium products. Both the upstream and downstream producers in aluminium need to synergize efforts to expand their portfolio of products required by auto OEMs. Keeping to the cost challenge has to take center stage in the strategic planning of aluminium players carmakers remain cost sensitive in a market primarily driven by volume. Since product development cycles run into months, even years, a quick solution for aluminium makers is to jump on the innovation bandwagon.

Moving ahead on product diversification, Vedanta for example has become the first primary aluminium producer in the country to roll out a special category of billets that can be used in air conditioning heat exchangers, an automotive application. This special alloy became a reality after a product development cycle of one year. In the long term, Vedanta plans to conduct R&D (research & development) in the heat exchanger market to produce new alloys that will improve the performance of the end products.

Road Ahead: Bet on aluminium to drive auto boom

India’s miniscule usage of aluminium can translate into a windfall for the future of the auto industry. The country’s automotive industry is on the upswing and will reach a capitalization of $115 billion by 2020. In this context, initiatives like ‘Make In India’ are expected to propel aluminium consumption in vehicles. There is enormous potential for Indian OEMs (and their foreign peers operating in the country) to ramp up aluminium use in their products and catch up with the global benchmark. There is a need to bring synergy between auto industry and aluminium industry. This can be achieved through a three-pronged approach:

  • Firstly, establish supply chains to meet demand for mass production in the automotive industry,
  • Secondly, coming up with technology solutions related to easy repair and maintenance
  • Lastly, accelerating the recycle & reuse of aluminium.

The Aluminium Association of India (AAI) has taken up a project on design and development of lightweight urban transport buses in collaboration with the Automotive Research Association of India (ARAI) and IIT Bombay with support from the Ministry of Heavy Industries.

Leading aluminium companies like Hindalco (which owns US-based Novelis), are already working with carmakers on several projects. However, these efforts need to be further strengthened with active participation of the industry and government. For downstream producers, the challenge would be to churn out quality products for the auto industry at a cost viable for them. As such, there needs to be an unwavering focus on technological R&D to come out with ‘cleaner’ aluminium.

Both the aluminium and auto industry need to work in tandem to come out with workable solutions. For the government, a key role can be to back technology development efforts involving various stakeholders towards promotion of use of aluminium in automotive industry. Technology interventions are needed at various stages in the production line- primary production, semi-fabrication, component manufacturing and system and vehicle integration at OEM level. Since aluminium use in auto bodies is directly linked to cutting emissions, the Indian government can toe the line of developed countries and introduce Corporate Average Fuel Economy (CAFE) standards. India has unveiled a target to cut overall car CO2 emissions from 130 gm/km to 113 gm/km by 2020. Currently, the weight of the car is used as the criteria for evaluating fuel efficiency and an average is set per company. This contrasts with the US market where norms are calculated as per the average fuel use of the entire fleet sold by an automaker. Were India to adopt a US-style normative framework, it will catalyze the greater adoption of aluminium in automotive components for a greener tomorrow.