Company plans for medium-term as it ramps up production of its nine-speed transmission in the U.S.
German transmissions supplier ZF Friedrichshafen AG (ZF) has announced a number of investments in production facilities over the last few months, the attest of which is INR1.5 billion (USD24.4 million, 21 March 2014) to establish a new plant Pune, India. The plant will manufacture transmissions, and chassis and powertrain components for commercial vehicles, along with providing aftermarket services. The plant is scheduled to become operational in the first quarter of 2015.
During 2013, the company made a EUR1bn (USD1.37bn) investment in the Asia-Pacific region. In China, the company opened a EUR15 million (USD20.7 million) plant in September 2013 to produce axles for passenger cars the plant will assemble axle sets for customer Beijing Benz Automotive (BBAC). In November, the company inaugurated a production facility for passenger car axle sets in Kulim, Malaysia. The plant supplies to the BMW plant nearby. In September 2013, ZF Lemförder (Thailand), a unit of ZF Friedrichshafen, expanded its annual Thai production capacity to 240,000 sets from 200,000 at its plant in the Hemaraj Eastern Seaboard Industrial Estate. ZF Lemförder supplies axle systems to GM, Ford, Mercedes-Benz, and BMW in Thailand, and with the capacity expansion, hopes to win new supply contracts from Japanese automakers, most of which use Thailand as their regional export base.
The Asia-Pacific region is a key market for ZF, contributing more than 17% to its overall sales revenue of EUR17 billion (USD23.5 billion) in calendar year 2013. ZF expects a further 20% growth in Asia-Pacific this year. In 2014, ZF has set aside a total capital expenditure (capex) amount of EUR84 million (USD115.9 million) for the region. China accounted for around 12% of the company’s total sales in 2012. ZF generated sales of EUR2.1bn (USD2.8bn) from China in 2012; growth of 22% y/y compared with the previous year. The company is also increasing its research and development (R&D) presence in the country in line with its “design-to-market” principle in order to identify the requirements of local customers.
IHS Automotive forecasts that localised transmission production in China is set to grow strongly for ZF, rising from 160,000 units in 2011 to 237,000 units forecast this year. The company has four transmission production plants in China (Nanjing, Ordos, Shanghai and Suzhou) as well as a number of other plants producing components such as drive shafts, chassis parts and electric steering systems.
Transmissions in the US
The company has also been boosted by Fiat-Chrysler CEO Sergio Marchionne’s endorsement of ZF’s nine-speed transmission despite early teething troubles. The OEM was forced to delay the launch of its 2014 Jeep Cherokee by two months last year as engineers struggled with a software issues. Despite this, Marchionne reiterated the group’s commitment to using the new transmission throughout the company's line-up to Automotive News over the weekend.
Chrysler licenses the nine-speed technology from ZF Friedrichshafen and builds the transmissions in Kokomo, Indiana and Gray Court, South Carolina. It launched the automatic last fall in the Cherokee and will use it next in the 2015 Chrysler 200 and Jeep Renegade. ZF supplies Chrysler as well as the Range Rover Evoque and Freelander with nine-speed transmissions.
IHS Automotive forecasts that ZF will ramp up production at both plants this year, producing close to a quarter of a million nine-speed transmissions at the Grey Court plant and 384,000 transmissions at its Kimono plant.
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