US-based auto parts maker Dana eyes big opportunity in India, to use country as exports base

Using India as a key base for exports with almost a third of its output shipped overseas, the American company has diverted some of the critical parts production from China to India to protect itself from the rising tariffs due to trade tensions between the US and China.

While it may take about two to three years for the Indian auto industry to regain its previous sales peak, Gajanan Gandhe, country head, Dana India, said that the company was betting on the domestic market returning to double-digits annual growth in the coming years.

The company expects India to account for 10% of the Dana Group’s global revenue in the mid-term, which could translate to a billion dollars in actual value. The group is predicting a global revenue of $9 billion for 2021.

“We have now reached a fairly large scale and India is a significant part of our global operations,” Gandhe told ET. “We don’t have enough capacity. In spite of COVID our plans have been running 24 by seven.” Gandhe was hired by the group to implement a “one-Dana” policy which involves having the same quality and governance standards at all facilities in India, including joint ventures.

Dana primarily makes automotive parts like axles and other drivetrain components. It recently set up a dedicated electric vehicle (EV) drivetrain making facility at Pune – it’s 18th plant in India including joint ventures. The new EV drivetrain plant in Pune was similar in its technological capabilities to the group’s two other such plants in Canada and China, Gandhe said.

The company invested $50 million to increase capacity across plants in India over the last two years. It was also converting its service centre at Pune to a technology centre that will support global R&D operations. The auto components maker is also actively pursuing inorganic opportunities in India to sustain a growth momentum.

It has set up a dedicated vertical for EVs and the company recently invested $18 million in Ashok Leyland’s EV arm – Switch Mobility. It will be developing EV drivetrains in conjunction with Switch. The strategic investment also affords it last right of refusal for all powertrain sourcing contracts with Switch.

Gandhe said that Dana will focus on making drivetrains for small commercial vehicles and buses and the investment in Switch was in line with that intention. In the two-wheeler EV segment, which Gandhe admits as being the fastest growing EV segment, Dana will make drivetrains only for high-end performance electric motorcycles. It will refrain from entering the high volume affordable electric scooters segment due to the high competition there.