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Magna to buy more auto parts from India, grow market share

Magna to buy more auto parts from India, grow market share
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First Published: Tue, Sep 25 2007. 01 15 AM IST

Updated: Tue, Sep 25 2007. 01 15 AM IST
Ontario, Canada-based Magna International Inc., maker of auto parts from engines to mirrors, said it is targeting to source $120 million (Rs477.6 crore) worth of auto parts from smaller Indian vendors by 2010, up from about $20 million now.
“We think the Indian market is at the take-off point now,” said Prasen Agali, executive director at Magna’s Indian unit. “We are talking to customers, and the first step is to put in infrastructure and means of delivering the products.”
Foreign auto parts makers such as Delphi Corp. and ArvinMeritor Inc. are expanding their presence in the Asia-Pacific market in general and India in particular, as these are the fastest growing automotive markets in the world. In markets where more than one million cars are sold a year, China is the fastest growing, with India following close behind, according to data provided by the International Organization of Motor Vehicle Manufacturers. This compares with 1-4% growth in large markets such as the US and in Europe.
Magna, which is one of the world’s largest auto parts makers with $24.2 billion in revenues last year, is building its first manufacturing facility in India in a joint
Changing gears: A photo of a transfer case from Magna International. The Canadian company is eyeing the Asia-Pacific markets for 10-15% of its sales by 2010.
venture with Amtek Auto Ltd to supply powertrain systems, slated to start in the first quarter of 2008. It also has two product development and engineering centres in India.
While Agali refused to say how much he hopes to sell in the Indian market, he did say the company was targeting 10-15% of its sales to come from the Asia-Pacific region, including India, by 2010. These regions contributed about 5% of Magna’s revenues in 2006.
“While there is no hard and fast rule, we can expect most of Magna’s new plants to come up in this region,” said Agali. “Our next set of deal closing will happen within the next three-six months.” He didn’t specify how many factories Magna was planning to build in the next three years or the nature of the deals.
Magna is primarily focusing on areas such as powertrain (engine and related parts) and hybrid and alternative fuel systems for which it is in talks with Indian auto parts companies for alliances.
Exports of auto components from India increased 33% to $2.8 billion in 2006-07, from $2.1 billion a year ago, according to the Automotive Component Manufacturers Association of India (Acma), an industry body, as firms such as General Motors Corp. and Volkswagen AG buy more parts to take advantage of low capital requirements and wage costs in India.
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First Published: Tue, Sep 25 2007. 01 15 AM IST