Big Auto crosses Great Wall for buying parts

Written by Arindam Sinha | Ronojoy Banerjee | Ronojoy Banerjee | Jamshedpur/New Delhi | Updated: Aug 24 2010, 10:10am hrs
With automobile sales growing at a brisk pace, domestic component manufacturers are finding hard to match rising demand from manufacturers, leaving big automakers no choice but imports. The countrys third-largest carmaker Tata Motors is importing close to 60% of its wheel rims and tyre requirements from China. Apart from cheaper rates and adherence to quality standards, Tata Motors has also been forced to look to China since local suppliers are unable to cope with the auto majors heavy requirements.

Tata Motors local plant head in Jamshedpur SB Borwankar told FE: We import around 60% of our total requirement of tyres and wheel rims from China for our Jamshedpur, Lucknow and Pune plants both for the heavy commercial vehicles (HCVs) as well as light commercial vehicles (LCVs).

According to Borwankar, Tata Motors imports tyres, wheel rims, power bearings and power steerings from China. He said that one needs to look at how the vendor units can bring about cost reduction and offer prices which would force Tata Motors to stop importing anything from China.

A senior company official at a leading car maker said on conditions of anonymity that cheap tyre imports from China has been an attractive option for carmakers. Since the Chinese want to compete among the best in the world, they have become very careful when it comes to quality issues. They dont want to compromise on that, the official added.

When contacted, a Hyundai Motor spokesperson confirmed that the company is facing a meagre supply of local tyres. We have added new vendors. Though there is a short supply of tyres, there are no issues with wheel rims, the spokesperson added.

Vishnu Mathur, director-general of the Society of Indian Automobile Manufacturers said the industry was facing a shortage in both tyres and wheel rims. Though there is a shortage in these components, there is no major price advantage that OEMs get by importing from China, he said. Mathur added that vendors had not expected such a high growth level and hence were not able to ramp up production.

Last week, Jayant Davar, president of Auto Component Manufacturers Association had said that vendors were renegotiating contracts with carmakers to increase prices, which would enable the auto component industry to ramp up production. Fresh investments are required to increase capacity to sustain the high demand in automobiles, for which contracts have to be re-negotiated, Davar had said, adding that the industry is expected to add $2 billion in capacity building.