Business, Economics and Jobs

India: Cheap rupee may boost autoparts sector


Managing Director and CEO , Mercedes-Benz India Peter Honegg gestures while posing with the new edition Mercedes-Benz M-class SUV car in New Delhi on May 15, 2012. Presumably, now he's doing something else with his thumbs.

India's autoparts sector has been one of the few bright spots in manufacturing, but it could get even brighter if the rupee continues to bump along at 56 to the dollar, writes

India’s car and motorbike makers, smarting from a tumble in the rupee that has increased import costs, now have little choice but to go local when buying parts — a shift that will further help the domestic industry become a sourcing hub for global automakers.

The website quotes Maruti-Suzuki's chief financial officer as saying that India's leading car maker could cut annual parts costs by 25 to 40 percent if it switched to local suppliers.

What difference does it make? 

Motorcycle-scooter maker Bajaj Auto saw operating margins of 19 percent thanks to sourcing 97 percent of its parts locally. Meanwhile, profit margins at Hero -- which imports 15 percent of its parts -- were only about 7 percent in the past quarter.