INDIAN AUTOMOTIVE SUPPLY CHAIN OUTSOURCING

By: Bhaskar Maheshwari

India is home to a vibrant automobile of more than 40 million vehicles. Contributes 4% to the economy and over 200,000 jobs. Integration of the Indian industry with its global counterparts in recent past. Significant export contribution. Consolidation or alliances might be expected, driven by the need for access to better technology, manufacturing facilities, service and distribution networks. Domestic OEMs to access global technology and experience, enables growth in ranges with fewer financial risks.

Automotive Industry-India

Current low car penetration. Rising prosperity and increasing affordability of private vehicles. Transport and mass transport schemes.

Key Growth Drivers

Key Challenge

Integrating the end-to-end supply chain

Outsourcing of Supply Chain

Most OEMs and large Tier-I suppliers have already outsourced their outbound Logistics activities like carrying out milk runs to collect and Deliver parts to OEMs on a daily basis warehousing /inventory management. Key logistics players have started maintaining warehouses in close proximity to OEMs plants and supplying Materials on a JIT basis. Related services being provided by large third party Logistics service providers(3PLs)include consolidation of materials, packaging, Incoming inspection, cleaning, etc.

Outsourced Elements in SCM

Inbound Logistics Inbound Logistics

Percentage of Respondents

Warehousing Warehousing

Outbound Logistics Outbound Logistics

Packaging Packaging 0% 0% 20% 40% 60% 80% 80%

20% 40% 60% Percentage of Respondents

Future Outsourcing in SCM

End to End SCM

Parts Sourcing

Planning and Scheduling/Inventory Management

Module Assembly

0%

Percentage of Respondents

20%

40%

60%

80%

Outsourcing Decision Matrix

Strategic Alliance

1984 Hero Group 26%, Honda Motor 26%, Financial Institutions 37%, Others 11%. 4-stroke motorcycles.

51:49 JV Setup plant in Nashik 2007 to produce half a million cars(sedan Logan) in next 5 years.

Strategic Alliance (Cont.)

3-way greenfield JV into Chennai in 2005. Setup a state-of-the-art manufacturing facility. 4000 crore investment. 4000000 vehicles per year.

Retain

Assembling

Outsource

BOSCH
Auto Electricals Lubricants Batteries Belts Breaking Systems Brake Pads Wiper Blades Charging Coils Clutch Plates Filters Gasoline Systems Horns Lighting Spark Plugs

SPARK MINDA
Locks Wiring Harness Instrument Panels Accessories Wiper Blades

Frame Assembly Step Guard Saree guard Handle Stand Carrier Handle Paddle Gear

OMAX

TATA-DELPHI-AVL

Tata Motors joined hands with AVL of Austria and Delphi Diesel of France to jointly develop common rail diesel injection engines to power its Indica and other passenger car variants. The Tata group flagship firm has agreed to pay 1.8 million Euro and 715,000 Euro as fee to AVL and Delphi respectively for the exercise. The new 1.4 litre CRDi engine will be Euro-4 emission norm compliant, the company said in an application to the government. The engines would initially be used on all Indica variants being shipped to Europe from January 2005.

TATA-FIAT

Fiat-Tata is an India-based joint venture between Tata and Fiat which produces Fiat and Tata branded passenger cars as well as engines and transmissions.

Tata Motors has gained access to Fiats diesel engine technology through the joint venture.
The two companies formerly also had a distribution joint venture through which Fiat products were sold in India through joint Tata-Fiat dealerships. This distribution arrangement was ended in March 2013, since then Fiats have been distributed in India by Fiat Automobiles India Limited, a wholly owned subsidiary of Fiat.

FORD-MAZDA

From 1979 to 2010, Mazda had a partnership with the Ford Motor Company, who acquired a 7% stake in 1979 and by 1996, owned 33.3% of Mazda. These included large and small efforts in all areas of the automotive landscape - most notably in the realm of pickup trucks (such as the Mazda B-Series, which spawned a Ford Courier variant in North America in 1972) and smaller cars. Mazda's Familia platform was used for Ford models like the Laser and Escort, while the Capella architecture found its way into Ford's Telstar sedan and Probe sports models. Mazda has used Ford's Ranger pickup as the basis for its North Americanmarket BSeries trucks.

SWARAZ MAZDA- ISUZU

In 2009, Swaraj Mazda started to roll out Luxury buses and medium-duty trucks powered by Isuzu Engines from a new plant in Punjab. Multi-axle trucks, tractor units and refrigerated trucks were other products. For an interim period, these vehicles were marketed under the Swaraj Mazda Isuzu brand. Now the products are branded as SML Isuzu Limited.