As the global economy is falling down, there is an increased pressure on the global auto manufacturers. This is fortunately a blessing in disguise for the Indian car market.
Many auto companies are accelerating their pace to source auto components from India to relieve the pressure forced by the current downturn in the market.
Mr Neeraj Hans, Purchasing Head of Fiat India said, “The slowdown is an opportunity for us to strategize our sourcing plans from India. Earlier, we were to supply to Europe from India. But now we are also evaluating the option of exporting to our plants in Brazil and Argentina. This would help us meet our sourcing target of €50 million by 2010.” He also added that the exports to Latin America used to give a cost advantage of about 10% but similar exports to Europe would give the company an advantage of 25-30%.
In response to the present situation, Thomas Thym, Head of International Purchasing Office in BMW India said, “In the present scenario, there is an increasing interest and the need to optimize cost. The toughening environment in the automotive industry actually emphasizes the demand for a well established international purchasing network in order to optimize the sourcing activities and utilize markets, which offer cost advantages.”
Even the French auto manufacturer has confirmed that 40% of its total domestic auto component suppliers meet their requirements by sourcing auto components from India. Renault in association with Nissan is planning to source auto components worth €300 million. Renault official stated that the company has its sourcing teams in Chennai and Pune. He also added that Renault is closely working with these teams to evaluate them to meet the company’s global requirements of auto components.