Pune: Italian automobile company Fiat SpA will increase its component sourcing from India almost five times by the end of 2010, Niraj Hans, India head for Fiat’s purchasing office, said on Tuesday.
The firm’s purchasing office in India will quintuple its global sourcing from India from last year’s €50 million (Rs325.5 crore) to €250 million by the end of 2010.
The company is expanding its business in India to include purchasing of components for its operations in South America, including Argentina and Brazil, and is in the process of requesting quotes for auto parts for engines, cars, trucks, buses and tractors made at its Argentina plants, Hans said.
“We have given out a couple of initial letters of intent, are in discussion with possible suppliers and expect commercial production by vendors to start in the last quarter of 2009,” he said.
The move is in line with a project that will integrate Fiat’s worldwide sourcing operations, which started in January 2008, and through which it plans to buy €8.5 billion worth of components from best-cost countries.
Fiat group officials had announced the project in May last year. Hans declined to discuss margins citing competitive reasons.
The group has been purchasing components for its small diesel engines in Europe, especially Poland, Italy and Spain, for over a year-and-a-half, as well as for the tractor business of group company Case-New Holland Global (CNH) in North America.
With the North American market in turmoil, the group is likely to step up the number of parts that it procures for that business, Hans said.
CNH is the second largest manufacturer of agricultural equipment in the world.
“In 2009, we will start purchasing products such as wheel rims for our trucks and fuel and water pumps for our cars and trucks for South American operations,” Hans said.
Pune-based RSB Transmissions, meanwhile, has secured a Rs43 crore order to manufacture gearbox parts and gear sleeves for Fiat’s Argentina operations for a car that is expected to generate 330,000 units annually by calendar 2011, joint managing director Shailendra Behera said. He could not specify which model the parts will be used on as Fiat does not give them that information because of competitive reasons.
“We will start submitting samples of the products in March 2009, which will be tested and validated by the group on their vehicles. We will start commercial production for volume supplies in the last quarter of fiscal 2009-2010,” he said.