Since the Indian car market is facing a repressive time, major auto makers are choosing the route of contract manufacturing as to launch their products in the country rather than splurging large amount of money on setting up production facilities. Analysts feel that strategic moves like contract manufacturing make a lot of sense in the current scenario, when the Indian economy, particularly the automobile industry, is going through hard times. According to industry experts, by entering into contract manufacturing process, it majorly helps both the companies to utilise their resources optimally besides carrying forward the positive momentum with greater operational effectiveness combined with significant cost savings.
It was recently learnt that China based Sports Utility Vehicle (SUV) manufacturer, Great Wall Motors, will be marking its presence in the upcoming 2014 Auto Expo. As told by sources, the company is finalising the deal with a Chinese government owned company named Beiqi Foton to launch its Haval H5 model in India. It is being learnt that the latter is building a production facility in Pune, besides setting another plant for manufacturing commercial vehicles at Khed.
On the other hand, Japanese car maker Isuzu might be be importing vehicle components from Thailand to India in order to assemble its MU-7 SUV and D-MAX pick up trucks at the Hindustan Motors facility in Chennai. It must be noted that Isuzu Motors already holds 15 per cent stake in the Indian company SML Isuzu, which produces buses, ambulances and modified vehicles. The Japanese company, Isuzu will be using the contract manufacturing route to launch their products from the Indian car market rather than engaging in full fledged production at the Chandigarh plant. As told by the company, it will first gain insights into the nature of Indian car market and after conducting all its analysis, the company will further plan to set up its own factory.
On this development, the President of Isuzu Motors India, Takashi Kikuchi was quoted as saying, "The collaboration with Hindustan Motors will help us to assemble our products at Thiruvallur, which is about 70 km from Sri City, Andhra Pradesh, where our own local manufacturing facility is coming up. We can therefore advance the scope of our sales operations and increase the scale of supply volumes without waiting for our local manufacturing facility to be ready."
As far as things for Chrysler are concerned, they will be seen utilising the manufacturing facility of Fiat in Pune in order to launch its iconic Jeep brand and Wrangler SUV in the Indian market. The cars of Jeep are majorly known for their off-roading driveability and are elated to be introduced by the company in India by mid 2014. In the meanwhile, it was also learnt that Chinese companies are deferring their investment proposals in India due to the low demand for passenger cars in India. Since the sales graph has been falling for the past nine months, foreign company are re-assessing their plans in India. Also due to the fact that stringent government policies like imposing additional taxes on SUV's have deteriorated the confidence of foreign companies to set up their plants in India.
