The Indian auto industry is booming and global automakers are taking advantage of the situation. Aside from being a growing market for automobiles, the country is fast becoming the favorite of car manufacturers in terms of sourcing auto components. Toyota and Nissan have already expressed their plans to purchase auto parts made in India. And recently, another carmaking company announced that they will be looking to buy more auto components in India.
Swedish automaker Volvo recently announced that they are going to procure auto parts from India. This means that the Swedish company's assembly plants in France, United States, Brazil, Sweden and complete knock down plants all over the world will be supplied with auto component made in India in the near future.
Volvo has already ordered 80 million euro worth of auto parts from the prominent Indian auto parts maker. This auto parts manufacturer will start delivering Volvo's order sometime this year.
"Global sourcing in India is undertaken by our purchasing organization located in Europe and the US," says Volvo India managing director Eric Leblanc. "Volvo 3P, a Volvo business unit responsible for product development, purchase and product planning, provides the local support to our global organization for sourcing from Indian suppliers. At Volvo, we strongly believe India is increasingly becoming the global hub of auto components sourcing," he added further.
The Volvo 3P's task is to aid Volvo's planed expansion in Asia. The business unit is also supposed to support the car company's developmental sites in Allentown, Gothenburg, Greensboro, and Lyon. The other sites are in Brisbane, Curitiba, and in Shanghai.
Interestingly, the Volvo Group also sourced its components from India. This means that not only Volvo cars will be equipped with Indian-made auto components but Volvo trucks as well. Aside from Volvo Trucks, the Volvo Group also provides auto parts to Renault and Mack Trucks. Volvo Bus, Volvo Construction and Volvo Penta also use components from India.
Several Original Equipment Manufacturers (OEM) are the ones who will provide Volvo with the auto parts they are in need of. Parts like drive axles, castings, sheet metal, rubber parts, engine components, and transmission parts just like will be supplied by Indian OEMs. "This portfolio will see further inclusion over time," said Leblanc. Aside from India, Volvo also expressed their interest in purchasing auto parts from Mexico, Brazil, China, Turkey, and Eastern Europe.
"Volvo believes emerging markets have a strong potential to serve global demand. These markets have been identified as they are quality conscious besides offering a relative cost advantage," said the Volvo India director.
The interest that car manufacturers are showing in the Indian auto parts industry will be beneficial to the economy of the country. With a better economy, more Indians would be able to buy cars which car manufacturers are happy to supply them with. Already, India is being considered as the fastest growing auto market in the world. With the investments poured into the country by ca manufacturers, it would be a win-win situation for the country and the carmakers.
The reason why car manufacturers like Toyota, Nissan and now, Volvo are interested in the auto parts industry in India is the lower wage in the country. By buying auto parts from India for less than what they would have to shell out if they will manufacture their own vehicles, they would be saving a lot and at the same time turning in a huge profit.
