The Hindu Business Line : Chrysler to source auto parts from India

Chrysler (India) Pvt Ltd is looking to source automobile parts from India. For starters, the company has signed a Rs 400-crore contract with a New Delhi-based car seating maker to export seats for its ‘Jeep Wrangler’ automobile built at company’s manufacturing unit in Toledo, US.

According to a senior company official, “This is just the beginning” of Chrysler’s strategy to outsource parts from South-East Asia.

Chrysler, which had merged with Daimler-Benz of Germany nine years ago, was recently bought out by private-equity firm Cerebrus Capital Management (holding about 80 per cent stake). Chrysler has since then chalked out a three-year recovery plan and replaced about 50 per cent of its top management personnel.

Speaking to Business Line on the condition of anonymity, the official said many more such contracts were currently being negotiated and it would be hard to put a value to the total outsourcing expected from India.

“We buy $40 billion worth of supplies each year. We would like to procure as much as possible from South-East Asia,” he said. India will be in Chrysler’s radar to procure parts that involve “a lot of engineered and laboured content” such as aluminium castings, power train parts and car interiors, the official said. Last year, the company lost about 30 per cent of projected revenues due to currency movements and supply chain-related inefficiencies. It expects to make up for this loss by buying auto parts from South-East Asia.

“That our competition has done it proves there must be value in doing so,” the official said adding cost alone was not the reason for outsourcing. Creative intellectual capital, availability of latest technology and ease of procurement were other reasons.

Sedan in China

Until now, about 95 per cent of sourcing and sales happened locally, focused around regions where 13 Chrysler manufacturing and assembly plants are located. Not any more.

“We are trying to sell vehicles in South-East Asia. We will find a product to sell in India too, perhaps in 2009,” the official said.

When queried about the car for India, he said the company would first set up a sourcing and supply chain network here. “Then we will evaluate customer preference before getting into the design and manufacture of the vehicle,” he said. The sourcing and supply chain backbone was also a pre-cursor to setting up a manufacturing/assembly plant in India, he said.

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