German automobile manufacturer Volkswagen is planning to increase the component parts sourcing from India taking its annual sourcing to Rs. 2,074 crore. The company plans to implement the expansion over a period of 3 to 5 years. In order to expand its range of spare parts that caters to global markets, the carmaker is expected to double the number of component suppliers to more than 200.
Increasing its number of suppliers will also enable the company to exercise more localization, up to 90 percent for its models in India, especially the ‘UP!’ small car which is under development and is expected to be launched by 2013-2014. Moreover, it would also help Volkswagen take the competitive pricing route in India against industry leaders such as Maruti Suzuki and Hyundai.
Commenting on the company’s plans, Mr. Mahesh Kodumudi, Executive Director for Components Purchasing Volkswagen Group India said, “We are still seeing India as a very competitive sourcing base – there’s a cost advantage of at least 10-15% over Western Europe.”
