The automobile components and spares industry in India not only caters to Indian automobile manufacturing companies but also exports its products abroad. The approximate monetary value of Indian automobile components exports in 2006 was 5 billion United States dollars.
Outsourcing
The Indian automobile companies rarely build the parts they use for manufacturing their vehicles. Automobile components and spares like interior trim panels, radios, and seats are some of the product examples that are manufactured elsewhere and brought to the main assembly plant for final fitments. Majority of Indian vehicle companies (like their global counterparts) manufacture automobiles that have approximately 65% external supplier made parts.
Indian Automobile Parts Scenario
The Indian automobile components and spares industry is highly disorganized and fragmented. Approximately 400 companies belong to the Original Equipment Manufacturers (OEM) category. Other companies (about 10,000 of them) operate in the unorganized sector. These low tier companies manufacture relatively unsophisticated car parts.
The India Advantage
The Indian automobile spare parts manufacturing sector possess a distinct commercial advantage over its global counterparts. The lure of abundant availability of raw materials, technically skilled workforce and relatively lower labor costs have compelled many foreign companies to invest heavily in India. The country has seen investments equaling 9 billion US dollars in 2006. Most of the automobile spare parts companies are proximate to the main car assembly plant. This helps to lower transportation costs and also have the advantage of a quick turn-around time.
Global Acquisitions
The initial and continued success of larger Indian automobile parts manufacturing companies has emboldened them to buy companies abroad. Indian companies like Amtek Auto, Sona Koyo, Bharat Forge, and Sundaram Fasteners have purchased companies in Western Europe and America. Sundaram Fasteners have taken over branded German automotive part manufacturer CDP GmBH to enable it to tap the highly profitable European car market.
