Three latest entrants in India’s small car market have set the fire in industry in terms of pricing. First Maruti Suzuki, the biggest carmaker in India reshaped its flagging model Versa into Eeco at mouth watering Rs 2.50 lacs and then Old American war horses, GM and Ford bringing out there new products i.e. Beat and Figo respectively at Rs 3.49 lacs (ex showroom price). This is seems to be a beginning of a price war in India which will reshape the industry as all major global players are now getting ready to take their part of Indian Automotive Industry Pie.
Well lower prices like these are not reached through one day of innovation by the marketing and finance guys in these organisations. It is the continuous hard work of the supply chain of these companies and shows the strength of our low cost automotive component supplier base.
The latest price wars will only put a lot of pressure on the buyers in these organisations to purchase at the lowest possible prices. The overall scenario looks very competitive as not only hard negotiation will be there to reduce cost but there will be smart new ideas that will be generated to make the cost of producing these components cheaper without effecting quality. This will be in turn enhances the overall capabilities of Indian part manufacturer to compete globally.
Already GM, Ford, Chrysler, Volvo and many other companies were aggressively scouting for Indian component suppliers for their global requirements and with expansion of Domestic Indian automotive market the chances that the Indian component supply base will become more stronger and technically capable to achieve this goal.
The whole game plan (of low cost Indian component supply base emerging stronger) becomes dynamic with the arrival of bigger and technologically advanced component suppliers in India in order to tap growing Indian market. These new players like American Axles and Magneti Marelli are technologically advance and will be more adaptable to changes happening in Indian market.
In the midst of all these development it will be exciting for every Automotive Supply Chain Professional in India to manage right product at a right time but at the cheapest possible price.
Wednesday, April 14, 2010
Sunday, April 11, 2010
Expanding Indian Automobile Industry – Challenges for Buyer
Indian Auto Industry is booming, Sales rose 25% from 1.5 million units to 1.9 million units in the fiscal year ended 31 March as new model launches improved consumer sentiment and increased financing resulted in buyers flocking to showrooms.
Also SIAM has predicted a continuous growth of 10% to 14% in the Fiscal year 2010~ 11. This is now bringing a new paradigm shift in the industry as a whole and being in the middle of this industry making a buyer job as an exciting venture.
With the arrival of global players in the Indian market has done a world of good for all parts manufacturer. They have more customers and different avenues of growth but this is also a very tricky times from a buyer prospective.
The major points where a buyer needs to look now are:
1. The capacities which were installed by parts manufacturers for one OEM is being shared with other OEMs also. This could lead to serious issues when the capacities are not well planned at the suppliers end.
2. Earlier the leverage of providing the business is being used as a very handsome tool in negotiation but now suppliers are getting new avenues of growth and they are free to do cheery picking rather then working for one OEM at its terms and condition.
3. The availability of raw material is also major cause of worry. As the production numbers are increasing and market is again showing high signs of volatility things could turn bad to worse in terms of supply.
These points have now started affecting the production at various plants in India and are making the job of a buyer more challenging and exciting. At one level there is a need to increase capacities at parts manufacturer end (to match its capacities with the increasing market and also OEMs capacities) and on the other the part manufacturer needs to update themselves both in terms of technology as well as advance process and know how.
Also SIAM has predicted a continuous growth of 10% to 14% in the Fiscal year 2010~ 11. This is now bringing a new paradigm shift in the industry as a whole and being in the middle of this industry making a buyer job as an exciting venture.
With the arrival of global players in the Indian market has done a world of good for all parts manufacturer. They have more customers and different avenues of growth but this is also a very tricky times from a buyer prospective.
The major points where a buyer needs to look now are:
1. The capacities which were installed by parts manufacturers for one OEM is being shared with other OEMs also. This could lead to serious issues when the capacities are not well planned at the suppliers end.
2. Earlier the leverage of providing the business is being used as a very handsome tool in negotiation but now suppliers are getting new avenues of growth and they are free to do cheery picking rather then working for one OEM at its terms and condition.
3. The availability of raw material is also major cause of worry. As the production numbers are increasing and market is again showing high signs of volatility things could turn bad to worse in terms of supply.
These points have now started affecting the production at various plants in India and are making the job of a buyer more challenging and exciting. At one level there is a need to increase capacities at parts manufacturer end (to match its capacities with the increasing market and also OEMs capacities) and on the other the part manufacturer needs to update themselves both in terms of technology as well as advance process and know how.
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