Indian auto parts not yet for Jaguar, Land RoverMarch 30th, 2008 - 11:18 am ICT by admin
By Venkatachari Jagannathan
Chennai, March 30 (IANS) Indian auto components makers may be shipping their products to several global firms, but they may not gain immediate entry into the Jaguar and Land Rover plants acquired by Tata Motors, experts have said. “In the short and medium term there will not be any orders for Indian component vendors,” said V.G. Ramakrishnan, director at the Automotive and Transportation Unit for South Asia and the Middle East with consultancy Frost & Sullivan.
“Even in the long run, it will be the Tatas who will benefit in terms of engine and power train technology and other spin offs, but not the vendors,” Ramakrishnan told IANS.
“They will now understand the dynamics of high speed engine and the power train. This would be of great help when they enter the aerospace sector,” he added.
He said the volumes of Jaguar and Land Rover are low and most of the components are custom or hand crafted, ruling out possibilities of mass production. “The benefit that Tata Motors’ vendors may derive is going up in the quality chain.”
There are others who see positives for the Indian component vendors. “The Indian group may look for new vendors for new Jaguar and Land Rover models. But this may take a couple of years,” said another industry analyst.
“The biggest challenge for Tata Motors is to balance the increase in costs with tradition, quality and performance of Jaguar and Land Rover,” he added.
He also pointed out that the Tatas decided to retain manufacturing of Jaguar and Land Rover in Britain, which may result in higher costs of production due to rising material prices in Western Europe.
Some industry officials said changing vendors for a vehicle like Jaguars would be rather difficult as most of the parts were critical because of high speeds of such vehicles, unlike those on Indian roads.
They said the pact entered by the Tatas calls for Ford to continue supplying vehicle components, power trains, stampings and a variety of technology for varying periods.
“Tata Motors have to be careful as there will be huge product liability suits,” warned one manufacturer, adding that for vehicles travelling at speeds above 150 km an hour, no company can take risks with components.
C. Ramakrishnan, president and chief financial officer for Tata Motors, said the possibility did exist for joint vendor development. However, this cannot be at the cost of allowing what has been already achieved to slip away.
“Both companies have competent high quality vendors. But we will explore the possibilities to synergise all our operations,” said Ramakrishnan.
There are some component manufacturers who see themselves as future suppliers to the two iconic British automobiles and add that there was a time when wheels for Jaguar were supplied from India.
“We supply wheels to Tata Motors. The Tatas are known to cut costs. That offers new business prospects for the Indian auto component suppliers,” said Srivats Ram, joint managing director of Wheels India Ltd.
“The Jaguar, Land Rover deal will definitely help Indian vendors as Tata Motors have a lot of experience with them,” added K. Ramaswamy, chairman of Roots Group, which makes horns.
J.S. Chopra, president of Delphi-TVS Diesel Systems, was more circumspect. “In the short term, status quo may continue. But in the long run, there may be some business opportunities for Indian component suppliers.”
Also looking at opportunities will be Tata Autocomp Systems Ltd, which is already a supplier to Ford besides DaimlerChrysler, Fiat, General Motors, Honda, Hyundai, Mahindra and Mahindra, Piaggio, Tata Motors, Toyota, and Volvo.
Similarly, Anglo-Dutch Corus, which was acquired by the Tatas last year for an astounding $12 billion, supplies steel to Jaguar, and its sales were also seen as going up following the takeover, analysts maintain.
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Tags: auto components, auto parts, chennai, component vendors, consultancy, global firms, indian auto, jagannathan, jaguar, land rover, medium term, middle east, plants, ramakrishnan, South Asia, tata motors, transportation unit