India An Emerging Auto Component Market For OEMs
Chennai, January 29 2005: According to Chad Kymal, international business management
consultant, Original Equipment Manufacturers (OEMs) in the US and Europe are now
looking at the auto component markets in South East Asia, China and India. "Based
on actual pricing studies, India's pricing in automotive components is as competitive
as Chinas pricing," he said at a book release function here last night. Stating
that volume meant scale and the opportunity to drive down costs, he said good companies
are going to "double, triple and quadruple" in size in the next few years. Kymal
said the Indian estimate was 1.18 million vehicles in 2005 to 1.6 Million in 2010
while Chinas sales estimates go from 5.89 million in 2005 to 9.94 Million in 2010.
He believes that Indias automotive market is going to follow Chinas model for growth
and that it is going to be accelerated with the advent for the "1 lakh Car from
Tata Motors" and automotive sourcing from India.
Emphasizing the importance of quality systems, he said China, was the "wild wild
west", was ''very capitalistic'' in its approach and was moving at a rapid pace
with its infrastructure already in place.
China and India are strong competitors for automotive outsourcing. However, the
auto component industry in India has tremendous potential and could well emerge
as the ideal destination for automotive component sourcing globally.
Kymal says that China does not have sufficient IT infrastructure, and their language
and culture make it difficult for an outsider to conduct business there. He added
that India must capitalize and leverage its strengths in IT and its young, technical
workforce. The time is "ideal' to be in the automotive market in India" as it can
expect dramatic growth in the next five years.
"Management is everything", says Kymal. World Class Organizational performance expectations
required cost reductions of 5 to 10 percent annually, 100% On time (JIT) delivery,
10 to 30 PPM quality levels and inventory turns of 100 to 300 per year. "There is
a paradigm shift in the OEM market," he said, adding "India could well be the source
for matured markets with large capacity opportunities for OEMs and tier one companies."
However, supplying automotive components in mature markets without world class performance
is a risky endeavor. "It is almost a bet that 1/2 hour for quality or delivery problems
from your company activity would attract a penalty of over $USD1 Million to the
According to Kymal, success requires three things: 1) forward looking management,
2) adoption of world class methodologies and ISO/TS 16949:2009 for the supply chain,
and 3) the adoption of an enterprise quality management software strategy. Also,
management is encouraged to "aspire for Lean processes that perform with Six Sigma
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