Technology And Manufacturing
Process
The body panel and
engine constitute a major portion of the total cost of car
manufacture. A typical cost structure for car is as given
below.
|
Parts/assembly
|
% of total
cost
|
|
Glass
|
5
|
|
Brakes/wheels/tyres
|
6
|
|
Interiors
|
7
|
|
Transmission
system
|
7
|
|
Ignition/exhaust
system
|
8
|
|
Steering/suspension
|
9
|
|
Comfort
fittings
|
11
|
|
Engine
|
16
|
|
Body
|
18
|
|
Others
|
13
|
Source : Probity
Research
Car manufacturing is
basically assembly of components procured from ancillaries or auto
component manufacturers. Nearly 80% of auto components are
outsourced by the car manufacturers. This helps in reducing the
capital cost needed to setup a car manufacturing plant.
Therefore, auto
ancillaries play a key role in maintaining the quality and price of
the product. But till the entry of MUL in the Indian car industry,
vendor development was hardly seen as a part of automobile
manufacturing in the country. With the setting up of auto component
manufacturing facilities by Indian promoters, in collaboration with
Japanese players for supply to MUL, the country was first
introduced to the concept of out sourcing.
With the new entrants
planning to start manufacturing facilities with a small capacity
base in the country, the role of auto component players will
substantially become important over the years.
Presently, some of the
luxury car manufacturers import CKD/ SKD kits and just carryout
assembly operations in the country. But with strict policy
guidelines of the GOI in force, all manufacturers have to opt for
70% indigenisation within five years of starting manufacturing
operations in the country. This will further boost the operations
of auto component manufacturers in the country.
