Carmakers are focusing considerable resources on meeting new fuel efficiency regulations to be implemented by governments in the coming years. 

And they know more efficient engines and electric powertrains cannot carry the whole load, turning their eyes to new alternative materials to make lighter auto platforms.

“Aluminum is a rational choice,” said Shashi Maudgal, president of Novelis Asia, in a recent interview with The Korea Herald. “It is more fuel efficient and three times lighter than steel. It also absorbs more crash energy in accidents.”

For Novelis, the Atlanta-based leading producer of rolled aluminum, most sales come from beverage cans for Coca Cola or IT for electronics firms such as Korea’s Samsung and LG.

Amid stringent emissions rules globally, the company now is pinning high hopes on the automobile sector that made up 6 percent of its total shipments last year.

Reducing a car’s weight by 10 percent can improve fuel economy by 6-8 percent, according to industry data.

Car manufacturers, in the course of downsizing their cars, have switched from steel to aluminum for wheels, hoods, transmission cases, heat exchangers like radiators, and other components.

More recently some luxury brands like Jaguar and Audi have been adopting aluminum for the basic shell and skeleton of their high-end models to maintain driving agility while downsizing the engines.

“Currently, aluminum’s penetration rate is less than 1 percent in the automobile sector. But I believe the segment will grow in the next years,” said the regional chief, who also oversees the Korean market.

Novelis sees that aluminum adoption by the automotive industry will increase to 5 percent in the coming three years, while the annual growth rate reaches 25 percent by 2016.

Maudgal acknowledged that using aluminum doesn’t come cheap. But he said aluminum vehicles can pay off their higher car prices after three years of driving.

Novelis is currently providing its aluminum products to 117 car models, including Hyundai’s luxury sedan Equus, while joining the all-aluminum car projects of luxury brand such as Jaguar and Audi.

When the company’s first automotive sheet manufacturing plant in China starts production next year, the Korean unit, which operates two plants in Youngju and Ulsan, is also expected to benefit directly from the emerging sector.

“Our Ulsan plant would produce basic materials to be sent to China for finishing,” Maudgal said.

Maudgal reaffirmed the company’s commitment to nurturing Korea as its production hub in Asia.

“Korea is a very good production spot exporting to the rest of Asia. We have highly qualified and disciplined manpower here,” he said, adding that product quality offset relatively high labor costs here.

In recent years, Novelis has already poured $400 million into its Korean production plants whose output will surge 50 percent to 1 million tons per year after expansion work. Of the new investment, $80 million will go to build Asia’s largest aluminum recycling center that will be located within the Youngju plant.

The Asia head, who has stayed in Korea since May last year, recently took office as chairman of the Indian Chamber of Commerce in Korea.

He also pledged to expand the presence of Indian businesses here.

“I hope to help identify opportunities for some 30 members companies to do business in Korea. I especially want to support smaller ones to get a vibrant platform,” he said.

By Lee Ji-yoon (jylee@heraldcorp.com)