Auto Parts Budget Expected to Boost Next Year
According to a Nasscom-ACMA research, the budget of 90 percent of auto parts manufacturers is projected to advance next year.
Reports show that during the 2005-2006 period, majority of auto parts makers obtained a twelve-monthly funds of Rs 20 lakh. In the coming year, experts anticipate that there will be a significant boost in the figures.
Nasscom recently sent out a report entitled IT Adoption in the Indian Auto Component Industry. The report was released in order to help the auto parts industry achieve its objective of attaining 40 billion dollar growth by 2015. It was made to comprehend the challenges brought by IT adoption that many auto parts manufacturers will certainly encounter. In addition to that, the report discloses that maintenance of hardware is a task that many auto parts firm usually outsource.
“The strong performance of the Indian auto-component sector in the past few years has led to rightfully considering it a sunrise sector of the Indian economy,” said Nasscom President Kiran Karnik.
“We see IT playing a very critical role in helping this sector achieve its global aspirations.”
“The manufacturing sector in India is critical to sustaining the growth of the Indian economy. IT has the potential to act as a force multiplier for the Indian auto-component industry,” added National Manufacturing Competitive Council Chairman Krishnamurthy.
Auto Parts Maker Strike Affects South African Auto Sales
The lengthened strike carried out by auto parts makers affected auto manufacturers in South Africa. This is evident in the failure of South African auto parts sales last month to surpass or even equal the re-energized sales it incurred in August.
According to business news from The Times, Volkswagen SA Sales and Marketing Director Mike Glendinning said that the protracted strike in the auto part industry could have generated “shortages of product that constrained the market".
Figures from the National Association of Automobile Manufacturers of SA’s confirmed that the September auto sales actually dropped. The sales of locally produced vehicle e models went down 13 percent, and exported automobile sales also faced a 43.4 percent dive.
The decline in auto sales last month is in all probability just part of the general downward movement of automobile sales these days. On the other hand, Standard Bank economist Danelee van Dyk said that the numerous strikes that sprouted in the auto parts industry can be a major factor in the decrease of supplies of certain vehicle models.
Though the downfall of auto sales can be attributed to two factors, the possibility that both could be blamed for the sales outcome is also strong. In a statement made in The Times, General Motors Sales and Marketing Officer Malcolm Gauld said, "Although it is difficult to quantify the effect on supply of the recent strike in both the motor manufacturing and component sectors, both of these appear to have had a negative effect on the market."
The strike in the auto parts sector, which lasted for two weeks, resulted to interruption in the operation of several big auto assembly facilities. Some of the affected automotive companies are DaimlerChrysler SA,Volkswagen SA, Nissan SA, Ford Southern Africa, Toyota SA, and General Motors.
Aside from the strike, analysts also blame other things in the cutback of sales. Among these are the rigorous laws regarding credits and the increase in interest rates. "The market is undoubtedly under pressure from a more constrained financial environment, with interest rates having increased by three percent in six steps since June last year, as well as from the more stringent requirements of the National Credit Act," explained Glendinning.
Auto Parts of Volvo to be Obtained from Indian Suppliers
Auto parts to be used by the division of Volvo Car Corporation in Sweden will soon be acquired from auto parts manufacturers from India. This outsourcing of about 99 million dollar worth of Volvo auto components shall be carried out this year.
A recent report from pr-gb.com stated that the Managing Director for Volvo Car Corporation in India Paul De Voijs declared that the main office of Volvo in the United States has long been relying on in part on the services offered by various auto parts manufacturers like Sundaram Clayton, Minda HUF, Rico Auto, Arvin Meritor, and Visteo. These suppliers of auto parts also obtain their supplies from Indian auto parts makers. Since auto parts from India are known for their dependable profitable design and excellent quality, they are generally patronized by major auto companies all over the globe.
According to the Automotive Component Manufacturers Association of India, a great number of Indian companies that offer various auto parts are aiming to dominate the booming auto market in Europe and North America. The idea of subcontracting auto parts is becoming widely acceptable in these markets since the auto parts from India are truly of high quality and less expensive.
Aside from Volvo Car Corporation, several major automotive companies also venture in outsourcing auto parts. Multinational auto groups like DaimlerChrysler AG and General Motors Corporation obtain the auto components they utilize from suppliers in other countries. Auto parts subcontract now a trend in the automotive industry.
Volvo Car Corporation is the producer of premium Volvo automotive parts like radiators, oxygen sensors, fenders, and hoods. It functions under the global auto manufacturer Ford Motor Company.
More General Motors Auto Parts and Vehicle Units to be Transported to China
For the next four years, 800 million dollar worth of auto parts by General Motors Corp., together with more than 20,000 Buick Enclave sports utility vehicles will be transported to the Republic of China. This is the outgrowth of a business contract that was recently entered into by General Motors and its Chinese commercial associate Shanghai Automotive Industry Corp.
According to a report from freep.com, the contract, which was made in Washington, ensures the Chinese division of General Motors of a wide array of luxury vehicle models, which include premier brands such as Saab, Buick, and Chevrolet. The substantial downpour of these luxury automotive brands to China resulted from the high expectation of the internationally acclaimed auto manufacturer. It anticipates that the sales of General Motors vehicles will reach 1 million for this year.
General Motors in effect relies to some extent on the thriving auto parts market in China for its international development. In point of fact, China has sold nearly 300,000 Buick units last year. For this reason, General Motors greatly moves its Chinese division forward through entering agreements that guarantee the tight business interaction between the two parties.
From the freep.com news, it was reported that General Motors Vice President of Global Sales, Service and Marketing John Middlebrook confirmed that General Motors is actually shelling out almost one billion dollars every year just to advance its branch in China. According to Middlebrook, China has turned out to be the biggest market of General Motors aside from the United States. Moreover, for more than 10 years now, the division of General Motors in China has already obtained auto units, parts, facilities that amount to approximately 3 billion dollars.
Despite the honest business intention of General Motors toward its deal with Chinese business partners, some United States officials are in favor in prohibiting the American multinational auto maker from establishing business relationship with China. The reason behind U.S. official’s yearning to impede the business between General Motors and its Chinese partner stems from the fact that the total commercial debit of U.S. with China already reached approximately 23 billion dollars in the month of July.
Tata Group Expresses Intention to Buy US Auto Parts Manufacturers
Indian automotive company Tata Group recently expressed its intention of buying manufacturers of auto parts in the United States.
According to Tata Sons Ltd. Executive Director Alan Rosling, there is a possibility for the auto supplier sector of Tata Group, Tata AutoComp Systems, to purchase US companies that manufacture auto parts. This auto company based in Mumbai aims to significantly expand its operation, and one vital way of attaining the development it anticipates is through getting hold of other auto parts makers.
Acquiring various auto parts manufacturers is also meant to make the access of customers to auto parts more convenient. “If your customer is selling vehicles, you can't be supplying many parts from a different continent. You have to have a point of presence close to the customer,'' said Rosling in a statement from The Economic Times. With this, production and sales will be the only tasks left to Tata AutoComp System based in Michigan.
The operations of Tata Group in the United States alone made up 31 percent of the corporations’ global sales returns. According to CSM Worldwide Inc. Auto Supplier Analyst James Gillette, it is very apparent that Tata is determined to move to the global sphere most probably because they have the finances to do so.
According to earlier reports, Tata Group conveyed its interest in global auto supplier Lear Corporation. Rosling refused to say something about his company’s previous decisions regarding the purchase of Lear or any global auto parts supplier for that matter. Likewise, he declined to talk about the plan of Tata Group to acquire the premier brands Land Rover and Jaguar of Ford Motor Company.
Engines in California Need Equipment Registration
All engines with at least 50 horsepower are required by Yolo-Solano Air Quality Management District to be registered in the statewide Portable Equipment Registration Program (PERP). This scheme is being managed by the California Air Resources Board to make certain that every automobile in the district follows the air regulation requirement.
Deputy Air Pollution Control Officer Paul Hensleigh said, “Time is running out for owners and operators of unregistered or non-permitted portable engines and equipment.” The registration of older types of engines will take place for a certain period of time.
There are certain requirements that must be met before an engine obtains a permit. First, the engine must have existed in California from March 4 of 2004 to October 1 of 2006. Second, the engine must comply with emission standards set by authorities. To secure a PERP permit, an engine must acquire a strict emission standard of at least Tier 1.
On the other hand, engines that would not be able to meet the emission standard are still allowed to function until the first of January 2010. Using these unregistered engines beyond the grace period will make the owners pay stern fines.
Being a public health agency, Yolo-Solano Air Quality Management District is committed in promoting the welfare, especially the health, of human beings. The engine registration program is certainly in line with their duty to safeguard the health of people from the detrimental consequences of air pollution. “Estimates of the cumulative emissions reductions will result in fewer premature deaths, fewer hospital admissions due to respiratory causes and cardiovascular causes and fewer cases of asthma-related and other lower respiratory symptoms," said Hensleigh.
Analyst’s Judgment Triggers Increase in Sales of Auto Parts Dealers
The sales of some auto parts dealers recently went up as a result of the coverage of analyst Itay Michaeli’s review of the auto parts industry.
On a recent coverage, Michaeli stated that the most excellent companies in the auto parts sector enjoy global grip of development, constructive flow of cash, levelheaded liability control, smart appraisals and properly managed range of products.
Michaeli’s statement caused a significant increase in the sales of certain auto parts suppliers. Michaeli's top pick Lear had shares that soared from 1.59 dollars to 29.67 dollars in noontime trade. After being chosen by Michaeli as among the leading auto suppliers, Goodyear Tire & Rubber Co., BorgWarner Inc., and Magna International Inc. also experienced a considerable boost in their shares. The share of Magna increased to 2.16 dollars, and BorgWarner’s share went up to 1.73 dollars.
Moreover, Michaeli mentioned that BorgWarner is a wiser investment when it comes to the manufacture of emission products. "Despite Tenneco's meaningful leverage to growing diesel volumes and tightening emissions standard, we see a number of setbacks in the story including limited potential for operating leverage to generate strong margin performance, EBITDA growth too weak to support a deleveraging thesis and an unattractive valuation," explained Michaeli in a news report by boston.com.
Even as the highly respected analyst anticipates a continuous decline in U.S. auto sales throughout 2008, the international auto parts market is estimated to expand by three percent annually due to the greater demands from Eastern Europe and Asia.
According to Michaeli, the triumph of automobile manufacturers and suppliers in the future will be based on how they create positive image in the tough and continually increasing markets and strengthen their positions in full-grown markets.
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