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Home > News > Industry Activities > Japanese auto component firms eye bigger pie of Indian market

Japanese auto component firms eye bigger pie of Indian market

By Shally Seth Mohil , 2014-10-13 10:18:11

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"We are here as we have a future in India," said Kazuhisa Takai, vice president at Sakura Autoparts India Pvt. Ltd. Takai's firm is one of eight Japanese auto component firms setting up manufacturing facilities in the outskirts of Chennai for India Yamaha Motor Pvt. Ltd's second factory in the region.

Takai's statement sums up the sentiments of a number of Japanese auto parts makers.

They are looking to set up and expand in India to meet the needs of auto makers from their country as Toyota Motor Co., Suzuki Motor Corp., and Honda Motor Co. embark on an aggressive localization and expansion drive in India.
 
There are close to 250 Japanese component makers already operating in India, according to the Auto Component Manufacturers Association (Acma)—a number that is set to swell by 35-40% over the next five years as Japanese parts makers boost investments in the Indian market, said analysts and investment bankers.
 
Since Prime Minister Narendra Modi's recent visit to Japan, the nation's automobile industry has been making serious attempts to grow their India business, said R.C. Bhargava, chairman of India's top car maker Maruti Suzuki India Ltd. Parent Suzuki Motor paved the way for investments by suppliers from Japan when it first entered the market in collaboration with the Indian government in 1982.
 
At least 80-100 suppliers will be entering India for setting up units for making parts for Toyota Kirloskar Motor Pvt Ltd, said Shekar Viswanathan, vice chairman and whole-time director of Toyota Kirloskar Motor Pvt Ltd. Getting suppliers from Toyota's global supply chain to set up manufacturing facilities in India, he said, is part of the company's strategy to be able to launch future models with a higher proportion of locally produced parts.

Viswanathan declined to identify any of these firms as they are in various stages of entering the market.
 
"It would be an opportunity for them (Japanese auto part firms) not only to feed the local market, which is expected to expand at a fast pace after a decade's worst slowdown, but also to use India as an export hub," said Amit Kaushik, principal analyst at I.H.S Automotive, a market researcher.
 
Kaushik estimates the Japanese supplier base will grow by at least a third over the next five years.

The Japanese companies are showing a renewed interest in the auto ancillary space after a long time, said Anil Singhvi, founder and chairman at Ican Investment Advisors, a Mumbai-based investment banking firm. Besides the growth opportunity that India offers, the depreciating currency is an advantage for these firms, he said, adding that mergers and acquisitions in the space could also pick up.

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