Global auto majors drive into India to set up purchasing offices
With more than 35 automakers already having their purchasing offices in the country, Ford and Hyundai will join the likes of Volkswagen, General Motors, BMW, if their plans fructify, reports Sumant Banerji.Updated: Jul 09, 2008 21:29 IST
The list of global automakers setting up international purchasing offices in India is set to get longer with Korean Hyundai Motor Corporation and one of the big three of Detroit, Ford Motor Company, planning to set up their own offices soon. With more than 35 original equipment manufacturers (OEMs) already having their purchasing offices in the country, Ford and Hyundai will join the likes of Volkswagen, General Motors, BMW, Daimler AG and Fiat, if their plans fructify.
“We do not source components from India in a big way right now but due to our production capacities there we have developed high quality vendor base there,” said Seok San Jang, vice-president, export coordination group, international business operations, Hyundai Motors. “Though making small cars is our priority there we are considering opening up a purchasing office to supply components for our plants in China, Turkey and Russia.” Hyundai recently opened its second car plant in India that doubles its cumulative production to 600,000 units per annum.
Unlike Hyundai, Ford already sources components from here for its plants but is now planning to formalise it by setting up an international purchasing office. “We do have a purchasing division which is part of Ford India that sources components,” a company executive said. “But considering the scope for growth of outsourcing we may set up an office for strategic purposes that will be independent and look proactively at increasing sourcing from India.” Ford is investing $500 million towards a new engine plant and doubling capacity in its Chennai plant.
“An international purchasing office essentially indicates the seriousness of a company in sourcing components from India,” said Vishnu Mathur, executive director, Automotive Component Manufacturer’s Association. “Rather than coordinating with somebody sitting in a different time zone, it is better to negotiate with a central agency in your own country. All the exports by OEMs will eventually be through their respective purchasing offices.”