Maxion Wheels’ newest endeavour in India is to locally produce aluminium wheels for a market that wants more than just lighter wheels. The company aims to initially produce two million wheels.
For the better part of the century, shedding weight from various components of a vehicle has been one of the many goals of OEMs and component makers. Aluminium wheels as an alternative to steel has been touted for several years now. Pioneering this, global wheel giant Maxion Wheels, has its fingers in both pies of the wheel market: steel and aluminium. Now in India, Maxion only recently unveiled its plans to produce aluminium wheels, after years of manufacturing the steel variant for leading OEMs in the passenger vehicle, commercial vehicle, and construction equipment space.
In February, the company held a ground breaking ceremony on the future site of its 25,000 square metre plant in Khed City, Pune. In this first phase, an investment of more than $ 50 million will be spent on the land and state-of-the-art plant and equipment for the manufacturing of two million wheels annually. The production is expected to start in the third quarter of 2019.
“We are developing two million wheels as part of the first phase, on a land of 20 acres. The amount of wheels we output will be approximately four million. We are expecting a turnover of Rs 6 billion through the first set of wheels manufactured and once we hit the four million mark, we can consider the first phase complete,” elaborated Prakash Kodlikeri, Managing Director of Maxion Wheels’ India operations, on the company’s current business road map for the plant.
Pieter Klinkers, Global CEO, Maxion Wheels International explains the global vs Indian scenario of the alloy wheels business.
Global demand for aluminium wheels has resulted in 65 per cent market penetration. However, Klinkers is careful to mention that the demand varies from region to region, and that in India it may still take a while until it reaches the same level. “In India the penetration right now is 25 per cent. We thought it would be a good opportunity to serve our customers in the growing Indian market. These are our global customers and they have been inquiring about the Indian market. Therefore, it makes sense for us to establish operations here as well.”
Going into the specifics, Klinkers has made the primary objective of the Khed City plant very clear. “The main reason for the growing demand is styling. Yes, there is a trend towards lightweighting but in passenger cars, the weight of steel wheels and aluminium wheels is approximately the same. At this point, it is clear that we are not really aiming to serve the lightweighting needs of Indian passenger cars,” elaborates Klinkers.
Even cost-wise, steel is the winner. However, customers today have more disposable income than they did before. Their changing tastes and lifestyle may affect their decision to buy cars that are more fashionable. “Due to the ease of styling and tooling, aluminium wheels are very popular among this newer demographic that wants aesthetics along with utility from their vehicles,” observes Klinkers.
“At the same time we are happy about the steel wheels business. In this way we get the best of both markets,” he added Globally, the world’s largest wheel maker is keeping tabs on current disruptive trends but is not really a direct participator. “Whatever may happen in the future with vehicles, one thing is for certain: cars will always need wheels. And we will be there to fulfill that.”
The 25,000 square metres is just the beginning of the vast expanse of land bought by Maxion Wheels. For the purpose of further expansion, the wheel giant has already squared off 85,000 square metres.
The plant will be known as Maxion Wheels Aluminium Pvt Ltd and is a wholly owned operation. Where the steel wheels venture was a joint one with Kalyani Forgings, this time the two companies have decided to go their own way. However, Kodlikeri has confirmed that the steel wheels operation will continue to be a joint venture.
As the demand for aluminium wheels was scarce and up until this point Maxion would import them to service the need, aluminium for wheels is a special requirement in India. Currently, Jindal, Vedanta, and Hindalco are collaborating with Maxion, but Kodlikeri is careful to say that they are all in the testing and development phase. As quality is key here, Maxion hasn’t established a primary supplier yet.
Reason for alloy demand
According to Kodlikeri, aluminium wheels were always needed by the premium car segment. In India alone the demand for it has increased so much that it now occupies over 35 per cent market share as compared to two years ago where it occupied only 12 per cent.
However, in India, the Khed City plant will manufacture wheels only for the passenger cars segment, unlike globally where Maxion services the alloy wheels needs of even the commercial vehicle segment.
“When it comes to CVs, there is a significant difference in weight, unlike passenger cars where the difference is negligible. In our main market, Europe, they have a drastic need for lightweighting due to Euro VI norms. Hence, we cater to them primarily. As the need for it grows here due to BS VI norms, we will be ready to supply alloy wheels then,” said Kodlikeri about the future of Maxion’s alloy offerings.
According to Kodlikeri, in India alone the demand for it has increased so much that it now occupies over 35 per cent market share as compared to two years ago where it occupied only 12 per cent.