India

Indian auto components industry has emerged from being a supplier to the domestic market to being one of the preferred choices for sourcing auto components. What are the important factors that have contributed to this growth?

India has a strong educated workforce and a strong engineering talent. With sales of cars increasing, there has been a rapid increase in the volume of auto components supplied to the domestic market, leading to efficiencies of volume. India's growth as the preferred destination for sourcing auto components can be attributed to factors such as easy availability of raw materials at lower price, developing infrastructure facilities (though a lot needs to be done), foreign car manufacturers setting up manufacturing bases in India, etc. OEM global platforms are required to supply to regions such as India. Some of the global OEMs have already made India the base to export to other countries based on logistics costs.

How far have Indian component manufacturers come in terms of achieving domain expertise to offer specialised services to global OEM manufacturers who are willing to outsource their core component requirements? What according to you are the ways to improve domain expertise and compete with global majors?

Indian component manufacturers do well in absorbing design expertise and deploying low cost manufacturing solutions. With an increase in the design abilities, Indian component manufacturers will then acquire sufficient domain expertise. There are quite a few ways to develop in this regard. One way to do it is to partner with global technology majors. Early involvement of engineering and science students will also help by taking advantage of India's strong educational network.

What are the major growth areas for the Indian auto components sector? What according to you are the key strategies that domestic components suppliers need to adopt to compete in the global market?

The forecast for the Indian market indicates that OEMs will increase their production from 1.8 million units in 2007 to a projected 4.8 million units by 2013. As a result, suppliers will need to continuously build facilities for domestic consumption as well as for exporting. It is necessary to develop or obtain access to latest technologies. For example, just as India "leap frogged" the land line phase by adding resources rapidly in the wireless industry, the Indian auto industry needs to move to more efficient modern technologies. At the same time it has to be environmental friendly.

What are the challenges that foreign OEMs and Tier 1s face while sourcing components from India? What strategy does Magna employ to mitigate such challenges?

Access to modern technology, infrastructure delays, which cause high inventory carrying costs and emerging global support system to take care of customers are certain challenges that foreign manufacturers face when they source components from India.

Magna has become the world's most diversified auto component supplier and contract vehicle manufacturer primarily by focussing on technologies that deliver better products at competitive prices. Part of the reason for our continued success is the ability to leverage our global footprint, diversified product line and innovative technologies.

Automobile manufacturers are concentrating on developing low emission cars powered by renewables or biofuels. In this scenario, how should Indian component manufacturers gear up to meet the changing production requirements of OEMs?

Utilising resources provided by the Indian educational system is the key. The leading research and applications of new technology in alternate fuels or lower emissions will make it easier for Indian component suppliers to partner with global companies and help develop such systems. Also, participating in programmes run by the Indian government will help develop their expertise, and fulfill the global requirements of the various OEMs.

What role does Magna's Indian operation play in the company's global strategy? What is the strategy behind Magna's recent spate of joint ventures?

Our Magna India office was established to support the growth of our groups and assist in their Indian sales and global sourcing activities. With more and more customers developing global programs such as Suzuki, GM, Ford, Tata and Mahindra amongst others, our Indian presence in the form of the engineering offices and manufacturing centres, helps us deliver solutions to our customers in almost all major automotive markets including India. Magna looks forward to enter into a JV when it supports our global growth strategy and meets the parameters within the region. For instance, we look forward to have partnership with a company who has the customer base we are looking to do business with and / or a company which offers a product or technology which enhances our growth in the region. The recent announcement regarding the Magna Powertrain and Amtek JV is a good example. This joint venture is the first important step in the Indian market for Magna Powertrain.

The future of Indian auto components industry in your words or any other comments you would like to make...

India is a key part of most of the global companies' overall growth strategy. Global OEM growth will increase to 84.5 million units by 2013 with significant growth in countries such as India. Therefore, it is important for global companies to be in those regions to support the growth and protect their traditional markets, while participating in the development of the Indian auto industry. The government will have to continue to work on the infrastructure required to support the growth (i.e. roads, electricity, etc.). Better infrastructure would mean higher car market penetration.

There has been an increase in the range of models offered with a number of OEMs entering India. This will lead to product segmentation and development of niche products targeted to more specific market segments. This, on the one hand would mean increase number of the small volume programmes, but on the other hand means larger overall market size.