aci_august2015-1Growing challenges…

Globalisation is pushing auto majors to consolidate, to upgrade technology, enlarge product range, access new markets and cut costs. They have resorted to common platforms, modular assemblies and systems integration of component suppliers and e-commerce. The component industry is undergoing vertical integration resulting into emergence of systems and assembly suppliers rather than individual component suppliers. Thus, while most component suppliers are integrating into Tier 2 and Tier 3 suppliers, larger manufacturers and multinational corporations (MNCs) are being transformed into Tier 1 companies.

The competitiveness in the sector will largely depend on the capacities of the industries to innovate and upgrade. The industry will definitely be benefited if it has strong domestic competition, home based suppliers and demanding local customers. It is a crucial fact that labour cost, duties, interest rate and economies of scale are the most important determinants of competitiveness. But the productivity and capacity utilisation are the prime determinants of the competitiveness and influence the national per capita income. The globally successful automakers will make their base in places which are high on productivity factor and capacity utilisation and where essential competitive advantages of the business can be created and sustained.

It would also involve core products and process technology creation apart from maintaining productive human resource and reward for advanced skill. The automakers will look for the policies of the state which will stimulate to innovate new technologies. Another major uncertainty facing the Indian market is the government’s policies towards foreign investments and joint ventures. Governments play a key role in shaping the growth of the automobile industry in emerging economies (as compared with developed countries).

Recently BMW India cuts prices on some of its models as a result of increasing its localisation levels to 50%. The main aggregate being engines, which is being assembled at the newly inaugurated Force Motors Chennai plant, which assembles the engines for BMW. The plant is on par with global standards and constructed in less than 7 months. This shows how the industry and government are eager towards implementing the Make in India campaign formulated by the GoI. As companies started manufacturing components and exporting to various countries, the current issue of Auto Components India focuses on Machining industry which supports the component manufacturers by providing advanced machines. The machine builders are also gearing up to meet the challenges towards developing advanced equipments that helps the Indian auto industry to be on par with global standards.

We have also carried a special report on Supra SAE India’s Student Formula 2015, challenging students from leading engineering institutions across the country to design and build a formula type race car. It was unique as the objective was to follow the typical new product development process. Besides, it also helps or rather encourages students to be practical.

Wishing you happy reading. Do send us your feedback.

Bhargav TS
Executive Editor


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