Volkswagen plans to source more parts from India
Posted on December 8th 2011Welcome back!
Volkswagen AG, the German carmaker, for its global operations will source more parts from India. Not just that but the company also plans to increase its annual component sourcing from India to around Rs 2074 crore, this will happen over the next 3 to 5 years.
With Volkswagen planning to launch its new car “UP!” in the small car sector sometime in 2 to 3 years, this move will also help the company to increase its localization to around 90 per cent. The German carmaker aims to double the current number of component suppliers in order to widen its range of spare parts made for the global markets. Other than increasing the localization for its new car in the country, it will mainly help the company to source components that are cost-effective.
Increased percentage of localization means that the company can price its new car to be launched in the small car sector aggressively and at competitive rate so as to be at par with companies like Maruti Suzuki and Hyundai India who are the market leaders in that sector for a fairly long time now.
Talking about this plan, Volkswagen Group India’s executive director for components purchasing, Mahesh Kodumudi said, “We are still seeing India as a very competitive sourcing base - there’s a cost advantage of at least 10-15% over Western Europe. And having worked with Indian vendors over the past few years, their capabilities too have matured and we do see them playing a bigger role.”
Over the next few years, as Volkswagen is planning to introduce newer models in the market, it will also make substantial investment in vendor management and tooling. The company presently sources engine and transmission parts, power train components, sheet metal, metallic parts and small plastic parts and aims to source around Rs 432 crore worth plastic parts annually.
Volkswagen AG not only sources from India but it sources about 70 to 80 billion worth of components from all over the world and now with the new plan from India, it will source about 1 billion worth of components for its domestic as well as global operations.
By editor in Auto India News, Auto Industry News, Volkswagen
Vishal Mittal responded on 08 Dec 2011 at 9:36 pm #
Localisation of parts would make VW more competitive but I have seen they are more focused on mechanical parts. They should consider localisation of Electronic parts also where there is great scope of cost reduction.
Now many vendors are available in India in Electronics items who provide world class Electronics items. Remaining VW is having its own advanced features in its vehicle which can boost its sale.
Further setting up of ample of service stations/network should be main focus if some car company really want to set up the credentials in India.
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