Indian auto-part makers, hurt by a global slowdown, are now eyeing the Chinese market to boost sales and protect margin.
"Global automotive giants are finding it difficult to deal with Chinese component-makers, especially with reference to the issues of quality and pricing,'' said Rishi Bagla, the Bagla group's joint managing director.
"This opens an excellent business opportunity for Indian component-makers on the global business front," he added.
Based in Aurangabad, the Rs 450-crore (Rs 4.5 billion) Bagla Group is involved in aluminium casting business and delivers shafts and spindles to firms such as Bajaj Auto, Lamborghini and Piaggio.
"We need to tap the overseas market as profit margin in domestic business is low. We plan to increase our sales with global OEMs to 50 per cent of our total business. For this, we need to overcome Chinese firms in the same segment," said Bagla.
The company has overseas sales of Rs 45 crore (RS 450 million).
Vanaz Engineering, which has expertise in delivering fuel injection systems and other components to two- and four-wheelers, also has a similar strategy.
"We have won orders from certain multi-national auto players, who were earlier trading with Chinese players. Considering the difficult days ahead, we have planned our growth in a way that won't affect our growth," an official heading the sales division said.
Other auto-component
makers are planning to cut cost and focus on select segments to retain profitability.
"Indian auto -component makers must target automotive players buying equipment from the Chinese market. They need to win over this business to India in a bid to improve profit margin instead of dealing with Indian auto giants,'' said a top executive of Uma Precision, based in Ranjangaon.
"As part of the measures to boost our profit margin, we are cutting costs and exploring new business opportunities globally. Our estimates suggest that some of the Chinese component -makers will lose business to India over the next three years."
Uma Precision earns around 14 per cent of its total revenue through exports, while the balance comes from Indian auto-makers. Some auto-component makers plan to capitalise on the global auto players' effort to cut cost.
"We are slowly shifting our focus from two- to four-wheeler business as this particular segment will have greater growth. In the globalised market, we must compete with Chinese component-makers and snatch their clients. That is the only way to grow in this situation," said Aditya Bhartia, managing director of Advik Hi-tech.
The company delivers products such as tensioner assemblies, oil pumps, fuel pumps, fuel feed pumps, fuel cocks, decompression units and water pumps to companies like Yamaha, Suzuki and Honda.
