General Motors to expand sourcing of auto parts from India

World’s largest automaker General Motors has announced plans to expand its sourcing of auto parts from Indian companies. It is now expected to grow to as much as USD 1 Billion by 2008 from just $120 million now. The aim is to cut costs of producing automobiles and outsource as much as possible to save money on the end product.

GM buys auto components like castings and forgings from more than 100 suppliers based in India. P. Balendran, vice president of General Motors India announced these plans while speaking to Dow Jones Newswires: “We are planning to increase auto parts sourcing from India substantially over the next few years. Auto parts in India cost 25-30% less than in North America or Europe. They are also around 15% cheaper than South Korea and Mexico, but the quality is on a par.”

The company is only one of the many automakers around the world, which outsource auto parts from Indian manufacturers. Some other automakers include Ford Motor Co., DaimlerChrysler AG, Volkswagen AG, Volvo AB and Mitsubishi Motors Corp. the reason behind this is the low cost and cutthroat competition in the local market making it tough to save money in their own localized markets.

GM India also has plans to introduce three new cars next year in a bid to increase its market share in Asia’s fourth-biggest automobile market.