Because of the cheap labor, many big auto producers are outsourcing their works in countries like China and India. Recently, Swedish auto giant Volvo has declared to increase its sourcing from India. Volvo said that it would increase its sourcing from India by 40% this year. I am quoting from the report:
"Swedish commercial vehicle maker Volvo plans to increase the sourcing of components from India by 40 per cent this year. The company sourced components worth 70 million from India in the last calendar year. According to Mr Eric Leblanc, Managing Director, Volvo India, the company was considering several new components that the company could start sourcing from India in the current year."
Mr. Leblanc was speaking at a press conference of the launching of two new truck models FH and FM. He expected the company to grow with the same pace with the Indian auto market. Volvo is gradually becoming a stronger player in the Indian market. Last year, Volvo sold 600 trucks and 400 buses in India. The company’s plant is situated in Tamil Nadu. Until now Volvo invested around Rs.2 billion in India.
Volvo mainly produces heavy duty tracks that are over 16 tons. At present, the company sales its trucks in over 130 countries. Volvo has been doing business in India for quite some time. The first Volvo track was produced in the company’s Bangalore plant and went out for sales in 1998. Volvo now annually supplies around 150,000 vehicles in India.
I came across a report on Indian auto market. It said that, Indian auto industry is growing at a rapid pace. In near future, the total automobile production will reach to 10 million and out of it commercial vehicles will play a significant role. Indian auto industry specialists forecasted a rise in auto sales to 13008 million by 2010 with a compound annual growth rate of 9.5%. I am hopeful that in near future we would see many other heavy vehicle producers like Volvo in the Indian auto market.
Volvo's decision to source more from India will make other auto companies to think of increasing their sourcing from the country.
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Razib,
On a similar note Volvo Car Corp part of the Ford empire has announced it will be selling cars in India in the fourth quarter because of the stability of currency, low inflation and favorable economic growth.
Checkout, Automotive News http://www.autonews.com/apps/pbcs.dll/article?AID=/20060628/REUTERS/60628001/1003/newsletter16
Steve.
Posted by: Steve A | June 28, 2006 11:31 AM | Permalink to Comment