'Motown to double exports in 5 years'

Most Indian automotive players expect to nearly double their share of exports over the next five years as global original equipment manufacturers (OEMs) and tier 1 players are seeking to source more components and vehicles from India, according to a KPMG report prepared in association with the Confederation of Indian Industry.

The KPMG report on the Indian automotive supply chain was released here at a CII meet on AutoSCM India 2006.

According to key findings of the report, most Indian players have indicated that exports constitute a key part of their business strategy over the next five years.

Most of the players, who have nascent exports (less than 10 per cent), expect it to be around 10-20 per cent. About 25 respondents expect over 40 percent of their revenues coming from exports over the next five years.

Most Indian players already have a global presence and are looking at furthering their growth.

At present, the Gulf countries, Europe and North America are the key markets for Indian automotive players. While these markets will continue to remain key destinations over the next 5-10 years, the Asia-Pacific region and Japan are seen as new potential markets for exports. About 77 percent of OEMs and tier 1 suppliers have already outsourced their inbound logistics activities to reduce costs.

As a business model for global supply chain management, a majority of players indicated that setting up own operations in other countries was the most preferred option, followed by acquisitions and joint ventures.

Integrating the end-to-end supply chain and improving transparency are seen as the most critical challenge.

Nearly 62 percent of the respondents ranked this as the most important challenge for their supply chain management.

Managing inbound logistics also remains a key concern for OEMs as well as auto component players, driven by more challenges related to reliability of data, lead time and absence of quality logistics players on the upstream side.

While 'managing product and part proliferation' is one of the second significant challenges which automobile players face, costs, quality and timely delivery continue to be key concerns for companies due to increasing competition and pressure on margins.

The study has also identified several key focus areas where investments are planned over the next five years.

These include vendor and dealer management, which are emerging as significant focus areas for OEMs.