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 supplier."

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 capabilities."

PR Contact : K.V.ASHOK, Impress PR, Chennai.
Phone : 9444048461