India edges out China, Mexico and other rivals to become top sourcing destination

India edges out China, Mexico and other rivals to become top sourcing destination
author image CarTrade Editorial Team
Friday 19 July 2013, 12:09 PM

There might be a silver lining in the dark cloud hanging over the Indian car market, owing to the consistent devaluation in the value of rupee. But, the country has now emerged as one of the top destinations for sourcing. In what is being said as positive in terms of exports and investments, India is edging out top rivals like China, Mexico and countries in Eastern Europe as the top sourcing region. The current scenario of rupee depreciation has lead to increase in the cost of imports, thereby leading to a rise in the price of cars. This has triggered a thought in several auto makers, who are looking to use this to their advantage and make India a hub for sourcing of parts and cars. Top officials of big companies like Renault, Ford and Nissan are of the opinion that India is the cheapest place in the entire globe to source vehicles and parts.

India edges out China, Mexico and other rivals to become top sourcing

In a recent interview, Vincent Cobee, Corporate Vice President of the Datsun Business Unit, drew a comparison between India and China as sourcing bases. He said, “India is now one of the cheapest places in the world because the rupee is sliding while the Chinese rinminbi is getting stronger so it is good for production and export. Although there are some components, particularly electronics, which can only be sourced from China, in other respects it has made Indian components more competitive.” It has only been a few days since the Datsun brand was unveiled in the country with its low-cost hatchback, named Go. Owned by Nissan, Datsun is planning to target markets like South Africa, Indonesia, India and Russia, which have good potential in terms of growth.

India edges out China, Mexico and other rivals to become top sourcing .

Also, Renault-Nissan alliance has made an announcement that the newly developed CMF-A platform, engineered in India, will also be made locally and subsequently, serve markets with high growth rates. Senior Vice-President and Chairman of Asia-Pacific Region of Renault SAS, Gilles Normand, explained, “We don't have 100% of our cars localised so there is some negative impact of the rupee depreciation but it is also a fantastic opportunity and long-term we are, in any case, accelerating localisation. In fact with Duster, we are taking the opportunity of the rupee devaluation to export. We are exporting the Duster to UK and we will start Africa soon.”

A similar parallel can be drawn for Ford India, which is planning to use the export margins on the EcoSport to prevent adversities of devaluation. A top company official said that the currency is only one of the several things that determine the price of a product. The official further added that rupee depreciation can work in favour of the company as they plan to export the EcoSport out of India.

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