Staff Reporter | 29 May, 2008
Volkswagen India is looking for suppliers for engine components for its greenfield plant at Chakan, since it is not setting a power train unit.

The German auto maker which has set up a plant with an investment of euro 580 million, where it will roll out a string of small cars, goes on stream next year, starting with the production of SkodaAuto's Fabia.

The plant spans over 230 acres and has a capacity of about 1.1 lakh. "We are open to sourcing for all areas and parts for engines," Thomas Dahlem, director, manufacturing engineering, VW India Pvt Ltd said.

Dahlem added that the company would look at assembling engines in the country. The company would not do any mechanical production but is in talks with suppliers for engine block and cylinder heads.

"We are simultaneously looking for global suppliers so that we can offer them, first, volumes for our India operations and then for the Polo globally," he added.

As per the company's transformed global policy, VW in India plans to locate select eight to ten supplier companies within its premises, in an area designated as an Industrial Park.

Dahlem explained that usually such suppliers are located close by but not within the VW plant. "We are locating them inside our plant since it reduces cost of transportation and logistics," he said.

Commenting on the recent spike in steel prices in India, Dr Dahlem said the project had factored in rise of input costs although he was hopeful that the central government's measures would bear fruit and prices would stabilise.

"We are a global player and we will look at global sourcing for steel. We could get it from lower cost locations like South Korea or China, although we hope that Indian steel prices cool," he remarked.

Meanwhile, VW India is taking the lead in getting the government to lay a spur railway line to the Chakan-Taelgaon industrial areas. VW's global practice is to move its raw materials and finished products by rail rather than by road.

Dahlem said VW India has committed to a certain volume for the railways, making the line a viable operation. The world's fourth largest automotive company is also taking the lead for the other industrial biggies in the region who will benefit if this comes through.

These include automotive majors like General Motors, Bajaj Auto-Renault-Nissan, Mahindra International Trucks, JCB, etc.

"We have been asking the local, state and central governments to lay the approximately 6 km rail line, which involves one bridge over a river. But there are many ministries involved, including the defence and we hope that they will lay the line by the time production starts. Our internal layout has been done keeping in mind that a railway line could eventually come through the plant," he added.