GM India to procure automobile parts worth $ 1 billion from domestic suppliers

Tuesday 27 March 2012, 10:52 AM by

General Motors India Private Limited, the fifth largest automobile manufacturing company in India, will reportedly purchase components worth $ 1 billion (Rs. 5,000 crores) from domestic suppliers. The company has decided to source parts from Indian suppliers for the next two years in order to run its overseas operations. However, to save costs General Motors India needs to synergise with other automobile company just like Ford India is interested in synergising with Peugeot.

GM India to procure automobile parts worth $ 1 billion from domestic suppliers | CarTrade.com
GM India to procure automobile parts worth $ 1 billion from domestic suppliers

At present, General Motors India has 722 local suppliers that have been awarded contracts worth approximately $ 500 million (Rs. 2,500 crores). According to P. Balendran, Director and Vice-President, Corporate Affairs, General Motors India, 200 of these 722 suppliers have been assigned the task of supplying parts for the company's Indian and global operations. The suppliers who produce parts as per the American car maker's specifications have been categorised under tier-one, two and three.

P. Balendran has also revealed General Motors India’s plan regarding its Light Commercial Vehicles (LCVs). He commented that LCVs that can carry cargo worth 2 tonnes would be manufactured at the company’s Halol facility in Gujarat. The company would also launch its Multi Utility Vehicles (MUVs), along with the LCVs, by December 2012.

When asked about whether GM and Peugeot are looking forward to synergise operations in India, he replied that their global union would create a positive impact on GM globally, especially in Europe. He added, “However, it is too soon to say how it will impact India and the Asia-Pacific region.” The two automobile giants have not yet joined hands to share suppliers or plants in India or any other country.

The company had revealed in February that it will pick up a 7% share in PSA Peugeot Citreon. This global alliance would lead to reduction in annual cost of worth $ 2 billion as the two companies would share components, modules and vehicle platforms. In addition, both the automobile companies would have a global purchasing collaboration for the procurement of components, commodities, goods and services worth $ 125 billion annually. They would also combine their Research & Development (R&D) capabilities for products that would be promoted and sold independently by both companies.

Michael Boneham, Chief Executive Officer and Managing Director, Ford India stated that his company may also consider collaborating with Peugeot India at its upcoming Sanand facility in Gujarat.