New Delhi: Suzuki Motor Corp. chairman Osamu Suzuki on Wednesday asked Indian auto part makers to re-invest their profits into their pedigree business instead of diversifying into other sectors.
“I request you to re-invest your profits into same business and do not invest your profits into making hotels, leisure, etc," Suzuki said while addressing the 55th annual session of lobby group Auto Component Manufacturers Association of India (ACMA).
“That’s going to be the key point in deciding whether you will become number one globally or not. I request you to re-invest in enriching your facilities, build more plants and extend your capacities," he said.
Most of the suppliers have diversified their businesses into sectors such as defence, aerospace and railways as a buffer against the drop in vehicle sales and a slowing economy, having learnt from the global slump seven years ago.
Non-auto sectors such as power, oil and gas, aerospace and railways offer better margins, and it makes sense for companies to diversify into them to beat the cyclical nature of the auto sector.
In fact, ACMA has set up a committee to promote such activities.
Suzuki also emphasized on stringent quality levels to be adopted by Indian suppliers.
“Quality is imperative. In Make in India slogan, I would like to add quality in India to make in India. In case all suppliers follow stringent quality standards, they can be number one in component market ahead of the US and China," he said.
“As you know, one billion recall news is floating in the global markets, it is important to maintain quality and choose your vendors selectively," Suzuki added.
Suzuki also said the Indian government is making efforts to develop India into an export hub for small cars.
“Small affordable cars with efficient fuel efficiency is is accepted in India and these also have demand in the global markets. India can be established as the hub of small car exports... govt is making efforts in that direction. Under the strong leadership of (Prime Minister) Narendra Modi, it can further be accelerated," Suzuki said.
There is no doubt that all the global equipment makers will be present in the country to penetrate the market, he said.