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GM India Plans To Increase The Localization Rate to 90%
General Motors India is very much serious in implementing its plans in our country. It is intending to localize more than 90 percent of its requirements in order to produce both commercial and passenger vehicles.
Apart from helping GM to manufacture cost effective products, GM"s intentions will help in developing many local car parts suppliers and other allied companies. According to Karl Slym, GM India president and managing director, the company will increase its localization rate to 90 percent, once it starts producing commercial vehicles.
Slym also mentioned that this would mean that GM will purchase and make everything in India and within a couple of years, GM would reach the 90 percent localization mark in passenger cars. While, some components are not available in India, GM also has existing international contracts which are yet to expire before commencing trade with local suppliers.
GM is confident that the suppliers who were able to get $500-million business allocation from GM outside India, will not take much time to get to $1 billion by the end of the financial year.
GM India"s 50 percent stakes are bought by SAIC (Shanghai Automotive Industry Corporation) and GM-SAIC have plans to launch new Multi Purpose Vehicles(MPV) and Sports Utility Vehicles(SUV) in India. If GM can manage to acquire 90 percent of parts from local suppliers, it would indirectly mean that they will bring down the input cost. GM India can then provide cars with aggressive prices and heat up the competition.
GM"s plans to foray into the commercial vehicles segment through its LCV and trucks through the GM-SAIC tie up will have to face stiff competition from local majors Tata and Ashok Leyland. In fact, Volvo, one of the largest truck maker in the world could only grab some market share in our country"s commercial vehicles segment, after years of trying.
Mr. Slym said that GM will begin the production of engines from November 2010 with an investment of 200 million dollars. The engine plant will have the total capacity of three lakh petrol and diesel engines. Chevrolet Beat will get the diesel engine variant, once the engine plant starts its production in November.
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