Indian suppliers have not been significantly hit by General Motors‘ bankruptcy filing and expect production to continue to the restructured automaker.
Go deeper with GlobalData
The worst is already over for the auto parts makers as they have already cut exposure in the past 6-9 months to the “big three” US carmakers, Angel Broking analyst Vaishali Jajoo told Reuters.
“Many companies have already got a cut in the last 6-9 months and exports have drastically come down. Impact here on will not be so much as its already happened…accordingly, they are working on terms where they will not be stuck for money,” Jajoo said.
The worst sales slump in eight years saw top local automakers like Tata Motors and Mahindra & Mahindra cut production, the report noted. Subsequently, government stimulus measures sparked a recovery, with car sales climbing for a fourth month in May and foreign car firms launching new models for India.
GM is dropping high profile brands like Hummer, Saturn and Saab and is now betting heavily on small cars and expanding in countries like India via new brands and local sourcing, Reuters said.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“Our aim is to continue growing India as local manufacturers, local developers for India. That’s been our goal for a period of time. That’s why we have put in a billion dollars in India to be able to get the infrastructure in place,” Karl Slym, managing director of General Motors India, told the news agency.
Wary suppliers have been cutting exposure and systematically reducing risks in the last 2-3 quarters in their dealing with GM.
“Initially we were supplying components on credit. Then we started taking full credit insurance. Subsequently, we told them to give us cash on delivery,” Santosh Singhi, chief financial officer of leading auto parts maker, Amtek Auto, was quoted as saying.
Amtek’s current exposure to GM stands at a little over US$1m a month, Singhi said.
Another Delhi-based supplier, Rico Auto Industries, had not seen any payment defaults from GM, but said the orders situation was currently “very dynamic”.
“I am sure none of the companies have seen any defaults in payments,” said managing director Arvind Kapur.
“We are supplying to platforms where none of the plants have been shut. If somebody is supplying to SUVs (sports utility vehicles) or minitrucks, then those people may be impacted as a couple of plants have been shut”.
“It’s a dynamic situation as we don’t know which plants they may decide to shut tomorrow. But the indication is that they have decided to shut some plants in which there are models they want to discontinue and also reduce some inventories,” Kapur said.
But, for the moment the industry is optmistic that supplies to GM will continue as before.
“It’s simple. Under chapter 11 GM continues to manufacture, so they would need components, and those supplying the components would continue to supply. The numbers they (GM) make in US would obviously reflect the orders in India, provided the models they are going to make will not discontinue,” JS Chopra, president of the Auto Components Manufacturers Association, told Reuters.
