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General Motors India, Fiat India to synergise engine sourcing news
Our Corporate Bureau
17 January 2003

Chennai: General Motors India and Fiat India are planning to synergise their logistics and component sourcing to derive economies of scale and cut costs. The two global automakers are planning to synergise their operations in these areas at a global scale.

''We are looking at synergising engine purchase and other supplier network,'' says P Balendran, vice-president (corporate affairs). Fiat India has a massive engine manufacturing capacity while the capacity utilisation is small. Though the company claims to have localised components to the extent of 70 per cent it imports engines from Germany.

General Motors Corporation holds a 20-per cent stake in Fiat SpA, Italy, and Suzuki Motors Corporation, Japan. It recently bought the Korean auto company Daewoo Motors and a new company, GM-DAT, has been formed to sell Daewoo products.

The American company also has strong technology collaborations with Japanese companies Toyota Motor Corporation and Isuzu Motors. GM-DAT has been formed after General Motors Corporation took over Daewoo Motors, Korea.

Globally there is a move towards having commonality of parts to cut costs. According to Balendran, currently there is no move towards having cooperation with Suzuki Motors and Daewoo Motors in India.

To cash on the existing market trend, General Motors India is planning to launch a multi-utility vehicle. The company intends to source engines from Hindustan Motors for that vehicle.

Balendran says: ''Our strategy is to have a slow and steady growth. General Motors Corporation has no dearth of products.'' However, it is learnt that the company has plans to introduce at least three more models soon. The company has permission to invest up to Rs 1,360 crore of which Rs 751 crore has gone into its Halol facility.

Last year the company has rolled out 8,500 units (7,000 Corsas) as against a total capacity of 25,000 units per annum. With the new models being planned the capacity is expected to double.

Following the recent Opel Vectra launch, General Motors India introduced an upgraded Corsa and Swing. According to Vinay Dixit, vice-president (marketing and sales), the two upgraded models will now sport clear headlamps with jewel effect, grey instrument panels, an attractive seat fabric, improved rear seats, centrally high mounted stop light, provision for rear fog lamps, fender indicators and others.

''We have consciously adopted a straddle pricing strategy to meet competition from the Ford Ikon and the Hyundai Accent,'' he adds. When queried about the Tata Indigo's lower price he replies: ''The Indigo will find favour with the taxi segment and fleet operators.''

General Motors India expects to log a 12-15-per cent growth this year as against 22 per cent registered in 2002. ''It is difficult to sustain such high growth rates,'' says a company official. ''The company is in the process of expanding its distribution and service network through out the country. From 42 dealers we want to go up to 70 in two years' time. The immediate target is to add three more dealerships by this financial year.''

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General Motors India, Fiat India to synergise engine sourcing