Staff Reporter | 11 Jul, 2008
Global automakers are now setting up international purchasing offices in India even as the list 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.

According to Rajiv Mitra, Hyundai Motors India Ltd: "One of the ways of making components cheaper is to produce them locally and this is exactly what Hyundai is doing".

"We have brought our Koreans vendors from Korea and they along with Indian partners have set up shop here", he added.

Meanwhile an official in Honda told SME Times that, "At present we have our set of OEM vendors in India who manufacture auto components for our vehicles as per the standard technical norms. We also import some components from Honda’s global sourcing network in the ASEAN region, which includes Malaysia, Thailand and Indonesia."

"We are not looking at any other markets because these markets get us the best of quality and costs," he adds.

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."