Tata Motors is looking to source more auto components from Korea that are both good in quality and more cost-effective than those imported from the US, Europe and Japan.
To offset the rising labour cost in Korea, the Indian auto major is also actively encouraging Korean auto parts makers to set up base in India, either independently or through joint venture with local partners, S.B. Borwankar, Executive Director, Tata Motors, said.
He was speaking at the Korean Auto Parts Plaza, a trade show being held in Pune for the second consecutive year. Nearly 20 Korean auto parts companies are participating in the two-day show.
During FY’13, the company expects its Korean imports to be valued at $85 million against $70 million during FY’12.
“These parts are around 10-15 per cent cheaper than Japanese components of the same quality,” Borwankar said, adding that while parts sourced from China were cheaper, the quality is nowhere so good.
Currently Tata Motors’ total imports stand at Rs 2,000 crore, with China being the number one supplier followed by Korea.
“We want to increase imports from Korea and other South-East Asian countries like Vietnam, Thailand and Indonesia by 20-25 per cent over the next two to three years,” he said.
Among the Korean companies expected to establish manufacturing bases in Pune through joint ventures are CTR (with ZF India) for suspension parts, plastic granules maker Cepla with TACO, and brake manufacturer Sanchen with the RSB group.
Tata Daewoo Commercial Vehicles
Speaking about its Korean joint venture Tata Daewoo Commercial Vehicles, Borwankar said that the sales of high commercial vehicles and medium commercial vehicles stood at 500 units a month, a drop of 25-30 per cent over the same period of last year.
Korean joint ventures in India could also supply cost-effective but high quality parts to this venture, he said.