ZF moves to strengthen its local production of nine-speed transmissions in the region
ZF Friedrichshafen is to begin production of its nine-speed automatic transmission at the newly expanded Asia-Pacific regional headquarters in Shanghai. The new EUR50 million (USD 67.2-million) headquarters will expand from 11,000 square metres to 54,000 square metres by the end of 2015 as the company looks to take advantage of growth in the region.
The establishment of manufacturing footprints by suppliers and OEMs and the substantial growth of the automotive market in general have created the need for increased local engineering support. International engineering firms enable the transfer of technology and knowledge to local Chinese manufacturers, increasing local design activity. Substantial gains in volume and share in Greater China are mainly in support of domestic/local OEM growth.
Transmission production in China is expected to grow significantly, initially as domestic market growth, followed by increased localisation of transmission build from foreign OEMs. Total annual transmission production volume will grow by a little less than 11.6 million units by 2020 to reach over 28 million units per year, representing a 41% growth over 2013. In the long term, China will most likely match its engine localisation strategy and increase its ambitions for both.
For now though European manufacturers, like ZF, are likely to dominate the market. The introduction of a complex nine-speed transmission to the region will only cement this further.
IHS Automotive Powertrain forecast manager Chris Guile comments that, "Until now, ZF's cutting edge nine-speed '9HP' transmission has only been built in North America for use by Jaguar Land-Rover, and Fiat-Chrysler. The announcement to add production in China has been long-anticipated, and suggests one of two possibilities: either ZF has found customers in China for the smaller 9HP28, which is not currently produced anywhere; or it has decided to increase global production capacity of the existing, larger 9HP48, which is currently produced at the Grey Court plant, in the USA," says Guile. "Either way, ZF's commitment will reflect the importance of cost-reduction when launching a major new products – particularly when targeting Chinese OEMs – and the changing attitudes towards production in China of high-technology automotive systems."
In 2013, transmissions designed in Asia accounted for the largest global production share of 55%. This trend has been observed for more than a decade, as Asian manufacturers have steadily increased their share of the global marketplace and have purposefully enacted a plan for overseas expansion of manufacturing capacity. By expanding their capacity in China, European manufacturers are set to take an increasing share of the design leads over the next seven years, from 34% now to 38% market share in 2021. This is thanks to continued exports to mass manufacturers in South Asia and growth for premium vehicles in parts of the BRIC markets.
In 2013, ZF generated sales in China of EUR2 billion, with 5,700 employees at 23 locations. This year, ZF again expects significant growth in the country and Asia-Pacific, with a further increase in staff expected. China is an extremely important growth market for ZF and accounted for 66.6% of Asia-Pacific sales in 2013. Globally China accounted for 12% of ZF revenue in 2013, with ZF generating sales of EUR3 billion in the Asia-Pacific region with 7, 500 employees at 37 locations in 14 countries, an increase in sales of 15% compared to 2012.
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