WHEN automobile sales skid, the wheels of fortune turned in favour of the Indian auto component industry.America’s loss-laden automakers and their OEM component suppliers are already looking toward low cost component manufacturers in India and China for a bail out. At the same time, Indian auto component makers have turned their eagle eyes on possible preys in the US.
An auto analyst with New York-based Calyon Securities, Mark Warnsman told ET: “It has been a long-standing practice for American OEMs to buy components from China, India and Mexico whenever their margins are under pressure.
This time around, OEMs are advising their component manufacturers to cut corners innovatively like paring weights of components without compromising on quality. And India is an ideal destination.”
Mr Warnsman expects that the US companies, in their bid to trespass competition, will join hands with counterparts in India and China by starting up plants in these countries or signing up JVs. India’s exports to the US account for $3.5 billion with a potentialto reach $15-20 billion by 2015.
Contributed By:
Prof. Amit Dey
(Globsyn Business School)
Source: The Economic Times
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