DEUTZ links cooperation with TAFE

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DEUTZ is adding another cornerstone to its Dual+ strategy, which includes both the further development of alternative drive systems and the expansion of the internal combustion engine business. The partnership with Indian agricultural group TAFE Motors and Tractors Limited, allows DEUTZ to expand its business in India, tapping into one of the fastest growing markets worldwide.

In 2023, the Indian economy grew by around 6 to 7 percent and it is expected that India’s gross domestic product (GDP) will quadruple by 2050. The agricultural and construction sector will play a major role in achieving this strong growth.

As the beginning of a long-term cooperation, TAFE Motors will manufacture up to 30,000 DEUTZ-engines in 2.2 Liter (50-75 hp) and 2.9 Liter (75-100 hp) under license. The aim is to augment and complement the wide range of engines made by the Group across emission standards. TAFE Motors will produce engines to suit growing demands of the Indian market, as well as for DEUTZ’s requirements. The engines will be produced in TAFE Motors’ modern manufacturing facility at Alwar, Rajasthan in India.

DEUTZ will use the Indian manufacturing base to market its engines in neighboring markets (esp. APAC), benefitting from advantages in production and logistics.

“The strategic cooperation with TAFE Motors secures DEUTZ access to growing markets with strong potential and long-term prospects,” explains DEUTZ CEO, Dr. Sebastian C. Schulte. “It also enables us to continue producing at competitive costs in the future and makes us less dependent on the existing supplier landscape, which is becoming increasingly challenging due to the technological shift and geopolitics”.

The cooperation gives DEUTZ the opportunity to expand its supplier base to ensure a more efficient and more resilient production. It will also reduce its dependence on supply chains in geopolitically tense regions – without sacrificing the corresponding cost benefits. This particularly benefits DEUTZ’s German production sites.

Speaking on behalf of TAFE Motors, Sandeep Sinha, CEO of TAFE Motors said, “This strategic cooperation between TAFE Motors and DEUTZ will be mutually beneficial, as it will offer access to shared resources and technologies to produce engines that complement TAFE Motors’ and the Group’s existing range to meet the demand for both domestic and international markets. This cooperation will also offer DEUTZ access to high-quality engines at best cost for new applications in Indian and relevant overseas markets”.

Both parties are exploring opportunities to expand their cooperation to green drives.

Facts and figures

There’s a good reason for Deutz to team up with TAFE, says Alastair Hayfield, Vice-President of Research Commercial Vehicles at Interact Analysis, a global market intelligence firm.  The following aspects are making this clear, according to Hayfield:

+ Globally, engine manufacturers are feeling the pressure of increasing electrification and stagnating vehicle growth in markets like Europe and the US. While engine suppliers to the off-road market/genset market are relatively insulated from the electrification trend in their market, the supply chain for engine components – injectors, cylinders, filters, etc. – is under pressure. Engine manufacturers supplying the off-road sector need to take steps to protect their supply chains.

+ The Indian tractor market will grow from approximately 900,000 units sold annually in 2023 to nearly 1.3 million units sold annually in 2035.

+ The Indian construction and road building equipment market will grow from approximately 70,000 units sold annually in 2023 to nearly 120,000 units sold annually in 2035.

+ TAFE does have its own engine suppliers – Simpson & Co and TMTL – but the partnership with Deutz will presumably bring better quality and advancements in meeting local emission standards.

+ The Deutz engine products address the 50-75hp (37-56kW) and 75-100hp (56-75kW) segments. For tractors, this market is only around 160,000 units annually in India (many tractors sold are low horsepower) but it is forecast to grow to 230,000 units by 2035.

+ Deutz is hoping to expand its business in a fast-growing market and to be able to supply products into other South-East Asian countries. Additionally, as the market for engines declines in Europe, maintaining a supplier base in India will allow Deutz to protect its global footprint of engine manufacturing and keep costs low.

+ India is also likely to be a relatively strong market for hydrogen ICE – both for trucks and off-road vehicles in the 2035-40 timeline – which is good for Deutz as it has developed an H2ICE program

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