ET reported that the products of which are being lapped up by vehicle makers here is giving sleepless nights to Indian players. To add to the woes, demand in India has slipped even as the largest export market, the US is turning to be a disappointment following the question mark on the bailout package for General Motors and Chrysler.
As a result of the US crisis, the massive growth in Chinese import is finding its way to India, among other markets, pricing out local auto component firms. Items priced substantially lower, like electrical parts, engine valves, steering products and wheel rims from China are threatening to put some domestic firms out of business.
According to industry sources, these products are dumped in the Indian market at a landed price that is 15% to 30% lower than the rates quoted by local players.
Mr Baba Kalyani chairman of Bharat Forge said that “We are worried about the Chinese dumping. However, the effect is not being felt much currently as most of us have slashed production drastically with the OEMs having cut orders. The impact will be felt once the market picks up.”
Many big manufacturers, such as TATA Motors, Bajaj Auto, Ashok Leyland, Mahindra and Mahindra, TVS Motors and Ford Motor India are already sourcing important components from China. Indian companies have even set up full fledged purchase offices there and are importing tyres, wheel rims and shafts in large quantities from Chinese firms.
According to the Automotive Component Manufacturers’ Association, auto component imports from China have up by 130% in the past two years and now constitute more than 15% of the total components imported from other countries from 1.5% in 2003-04. The value of auto component imports from China stood at INR 2,200 crore in 2007-08.
As per report, the pace of such dumping has accelerated in the last few months with the Chinese automotive industry facing a slowdown. Growth in production of vehicles as well as sales in Mainland China was down to a single digit rate during January to November. In India, too, total vehicle sales up by 2.4% at 66.25 lakh vehicles during the April to November period.
A Delhi based component player said that “They want to clear the inventory by the year end, so products are being dumped at a throwaway price.” He said that such dumping affects the replacement market far more than the OEM market.
Mr Nirmal Minda CMD of Minda Industries said that “The artificial pricing by Chinese companies is posing problems for Indian companies. In some cases, the landed cost of Chinese components is cheaper than the raw material cost of the same component in India. Raw material prices have gone up by 50% in the last couple of years, but our prices have risen by only 10% to 20%. It has become very difficult to compete against cheaper Chinese imports.”
Source : Steelguru