The Indian
auto component industry could be the next big success story after software, pharmaceuticals, BPO and textiles.
The size of the global auto component industry is approximately $1trillion. The leading auto component manufacturers (OEMs) in the world are Ford Motors, General Motors (GM), Delphi Corporation, Caterpillar, International Truck and Engine Corporation and Cummins. The US is the world's biggest auto component market. In 2002 it imported auto component worth $69 bn.
The auto component industry in India has seen high
growth in recent years. There are three major reasons behind the recent robust growth of auto component industry. First, the domestic automobile industry (two-wheelers, commercial vehicles and passenger cars) has registered good growth. High
demand for automobiles has subsequently fuelled the demand for auto component from automakers. Second, the replacement market is growing rapidly as more and more new vehicles hit the road. Moreover, the product life cycle of automobiles are becoming shorter. As more new models hit the road the demand for auto component keep rising. The increasing number of vehicles means an expanding market for replacement
components. Third, the global automobile industry is going through its worst phase ever. To cut production cost, the world's leading automobile companies are sourcing cheaper auto components from countries like India and China. To become globally competitive, Indian auto component industry has to learn the best manufacturing practices, be quality consciousness and adhere to strict delivery schedules..
The Indian auto component manufacturers serve major OEMs as Tier II or Tier III
suppliers. China is the hottest destination for auto component sourcing as it has many Tier I suppliers. China has over 500 Tier I auto component manufacturer. Tier I manufacturers have enormous advantage over Tier II or Tier III suppliers. The major advantage is that Tier I suppliers are the first to get orders for components from vehicle makers. Getting early orders help the Tier I supplier to recover the investments very quickly. Moreover, when vehicle sales peak they earn profits