NEW DELHI: The bankruptcyfiling by General Motors , the world’s largest carmaker till last year, may hit Indian auto component exports and lead to surplus capacity and payment delays in the domestic market , say industry experts. GM accounts for a significant chunk of $900 million worth of auto components India exports to US every year.
The exact extent of loss of orders for Indian component makers could not be ascertained. Some component makers said they had cut exposure to GM in the previous months as its bankruptcy became imminent. “As part of its restructuring GM will close 11-12 plants and phase out some models. If a component maker is supplying auto parts to that model or plant, then it would be definitely impacted ,” said Surinder Kapur, chairman and MD of parts maker Sona Group, which sells about 3% of its overall export to GM in the US.
Agreed Shriram Pistons managing director AK Taneja: “The component industry is already facing the a surplus capacity and GM’s restructuring could add to that burden.” Several Indian component makers had insured themselves against loss of orders and delayed payment on account of the US automaker’s bankruptcy.
But many were not able to get insurance cover. Auto Component Makers Association (ACMA) secretary-general Vishnu Mathur said the companies who have not got the insurance cover might face delayed payments. Though some manufacturers such as Rico Auto, which gets 2.5% of its overall export revenues from GM, said they haven’t faced any payment delays yet. Meanwhile, GM India in a press statement clarified that it would continue to operate in the country even as its parent filed for bankruptcy.
GM said it would go ahead with its plan to launch new cars including the mid-size sedan Cruze, a new mini-car (code M300) and an array of alternative fuels cars. Kolkata-based GM India dealer Dulli Chand Motors’ owner Rajesh Sanci said the news has ended several months of uncertainty in the market . “GM has made it clear that its Indian subsidiary is separate from the US and Canadian operations. While customers were a bit wary initially, but there has been no real impact on our retail sales as our average monthly sales of 80-90 cars remains intact.”
Impact minimal, says Sundram
WHEN reports of General Motors filing for bankruptcy trickled in, it deepened the worries of Indian auto-component makers, who were already coping with low demand in the domestic market, reports ET NOW. But TVS group company Sundram Fasteners, which has been supplying radiator caps to GM for the last fifteen years is not worried as it has gradually reduced exposure to the carmaker over the years, a top official said.
“Last year, of our total sales of Rs 1,260 crore, GM contributed Rs 11 crore. At one point, the supply was huge but now it’s less than 1% of revenues. We have diversified our exposure over the years,” Sundram Fasteners chairman and managing director Suresh Krishna said.
Source : The Economic Times