Auto parts makers see sharp drop in orders from US, Europe
The steep fall in automobile sales in the US and Europe has impacted Indian component suppliers. The economic slowdown there is compelling vehicle manufacturers to cut production and cut back on parts sourced from India. The Indian suppliers are experiencing a 20-30 per cent drop in orders.
"We have been experiencing the slowdown at our plants in Germany since August," said a top official from Sona Okegawa, part of the Sona Group. The company acquired German conglomerate Thyssenkrupp's business unit in January this year to become the world's largest precision forgings supplier.
The Rs 1,100-crore Wheels India, which supplies to companies such as Volvo, Komatsu and Caterpillar, reckons that declining truck sales have lowered its overseas schedules by 20-30 per cent.
"Truck sales are declining in Europe and this has resulted in a 20 per cent drop in our order books compared to what our customers had indicated," said Mr Srivats Ram, Managing Director, Wheels India and Chairman of Auto Component Manufacturers' Association for Southern region.
According to JD Power, US auto sales are estimated at 13.6 million units, the sharpest fall for the world's largest auto market in 15 years. Even in Europe, truck and car sales are declining. Although automobile companies have cut down on orders for Indian auto parts, there could be some respite in the case of new global contracts, said Mr Sudhir Rao, Chief Executive Officer, Avtek, the component arm of Hindustan Motors.
"We have been experiencing a cut in schedules from overseas customers by 25-30 per cent since the last few months. But with the rupee again falling and freight rates expected to come down, there is a renewed confidence in the competitiveness of low-cost countries and, thus, when bidding starts for some new contracts, there could be increased sourcing from India," he said.
Source: The Hindu Business Line
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