Auto component makers are ramping up production capacity to meet escalating demand for vehicles in the country  The spur in demand for vehicles in the country has not only forced auto makers to ramp up production, but the same is also putting pressure on auto component vendors to look out for alternate sites to set up new plants and upgrade the existing ones. It is anticipated that auto component makers will invest around Rs 9,000 crore in 2010-11 for capacity expansion, which is nearly 33% higher than the investment made in 2009-10.Demand higher than expected
According to Ravi Jain, managing director of Ravi Transmission Products, a mid-sized manufacturer of automotive components in Mumbai, “The demand for vehicles has surpassed all expectations compelling auto makers to ramp up production to meet the escalating demand, while auto component makers are forced to scale up production in order to supply parts on time. Undertaking capacity expansion in such a short period of time is proving to be a challenging task for auto component vendors.”
It is to be noted that several leading auto makers such as Mahindra and Mahindra (M&M), Tata Motors, Maruti Suzuki etc are eyeing capacity expansion and have planned massive investment in this regard.
According to Sandeep Malhotra, director of Rotela Auto Components, a mid-sized manufacturer of automotive components in New Delhi, “With a slew of new launches in the past few months, there is tremendous pressure on auto component vendors to roll out parts for new car models. We expect demand to go up further and therefore it is essential to expand capacity.”
Experts also believe that capacity expansion is essential to counter threat of cheap parts being used in vehicles procured from other countries like China. Owing to unavailability of adequate auto parts in the country, auto makers are forced to venture into foreign territories. Several auto vendors are also tying up with foreign counterparts to roll out products amidst robust demand.
Arup Choudhury |
