Volvo to Outsource Auto Components From India

by : Evander Klum

Volvo Car Corporation Sweden has recently announced that it will outsource components worth $99 million from India this year.

Volvo is joining other international automakers such as General Motors Corporation and DaimlerChrysler AG which both have employed the same outsourcing programmes for components that they used in manufacturing their vehicles.

Volvo Car Corporation, the producer of top of the line auto parts like , is part of the Premier Automotive Group and one of the luxury brands currently owned by Ford Motor Company. According to Mr. Paul De Voijs, Managing Director, Volvo Cars India, the US head office of Volvo has been outsourcing components from major Tier 1 and Tier 2 companies like Minda HUF, Visteon, Arvin Meritor, Sundaram Clayton, and Rico Auto.

These major auto sources also obtain their critical components from India starting with the engine parts and making up nearly a third of all exports. Meanwhile other parts such as steering parts, body chassis, suspension and braking parts, equipment, electric parts, and other components make up for the remaining percentage of the automotive exports.

The demands for these automotive parts are growing. As a matter of fact it is projected that the industry will be having exports jumping from $1.8 billion in 2004-2005 to $5.9 billion in 2008-2009.

And according to the Automotive Component Manufacturers Association of India more than a third or 36 percent of Indian auto component exports are heading for Europe with North America closing in at second place with 26 percent.

Volvo just like the rest of other major automakers will tap onto the growing automotive industry in India which is not only known for its high quality but also its frugal engineering.

The ability to offer quality products at prices that can compete globally has led to a CAGR of 20 percent from 2000-2005. It was also in the year 2005 when the auto components industry was valued at over $10 billion and expected to double every four years to reach $18.7 billion in 2009 and $40 billion by 2014.

Volvo Trucks Deliveries Down
In other Volvo news, this time with regards to Volvo Trucks North America---it has obtained a 62 percent decrease in deliveries of new trucks this year. Through August the truck deliveries to dealers and customers only reach 9,082 units down from 24,197 trucks obtained during the first eight months of 2006.

Truck deliveries do not exactly equal sales and according to Volvo officials they are expecting for their US truck sales to further decline this year. The dealers and trucking companies purchased a high number of trucks last year to counter the high emissions standards that took effect last January 1.