India Auto Parts Manufacturing Expanding into China

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Feb. 20 – Motherson Sumi Systems, India’s largest auto parts manufacturer, is pursuing an aggressive expansion strategy and is looking to significantly increase its market share in China, Brazil and the United States. The company is already adding capacity to its China plants, which currently supply rear view mirrors, bumpers and body parts to Porsche and Volkswagen, and to its operations in Thailand, Brazil and Mexico. The company has a US$5 billion sales target for 2013.

“New volumes will come from developing countries,” said Motherson’s CEO, Pankaj Mital.

China’s auto part output is expected to hit 20 million units this year for the first time. According to the China Association of Automobile Manufacturers, the sale of passenger cars alone is expected to rise by 8.5 percent to 16.8 million cars this year.

Motherson are on course to become the world’s largest auto component part suppliers, and has seen its shares rise 68 percent in the past 12 months. Motherson are currently the second best performing stock on the Bloomberg Asia Pacific Auto Parts Index.

“The dynamics across Asia are shifting and we are seeing the opportunities arriving now for MNC’s and smaller businesses as China’s consumerism begins to have an impact,” says Chris Devonshire-Ellis, Principal of Dezan Shira & Associates. “Just a few years ago it was unthinkable that an Indian auto parts supplier would take on China in their own backyard, but improved market access regulations and sheer demand has allowed the likes of Motherson to succeed in a spectacular manner. The message for Indian and other international companies is that China is open and buying, and that now is the time to develop this market”.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

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