New Delhi: Italian auto maker Fiat SpA, which started buying Indian components for its cars, trucks and tractors two years ago, plans to expand the business from next year.
“There is a management commitment to increase (buying of parts from India) in 2011-14 once the next plan is approved,” said Niraj Hans, who heads Fiat’s purchasing office in the country. He did not specify how much would the increase be.
Fiat had set up the office in May 2008 aiming to source €250 million (Rs1,415 crore) worth of components by 2011, part of a plan to buy components worth €8.5 billion from best-cost countries.
But so far, the company has sourced only €100 million of supplies from India, partly due to the slowdown in global sales in 2009. Hans is confident of reaching the €250 million mark. “If the slowdown had not happened, we may have revised it upwards,” he said.
Fiat earlier sourced only 30% of the parts of a particular model from India. But since last year, it has been buying as much as 60% of the parts.
Many global auto makers have started sourcing parts from India in the last three years to take advantage of improving quality and lower costs. Component exports totalled $4 billion (Rs18,040 crore) in 2009, according to the Automotive Component Manufacturers Association, or Acma. The industry plans to raise this number to $20 billion by 2015-16.
Jayant Davar, president of Acma, said Fiat plans to raise its sourcing to $500 million a year by 2015. In the same period, General Motors Corp. plans to source parts worth $1 billion a year.