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Foreign car firms keen to use more local parts

New Delhi, May 31: Foreign car companies with a presence in the country are looking at ways to source more parts locally, which will help them to control costs.

Among those keen on localisation are Suzuki, Honda and Toyota. They feel this will help to control costs and fight uncertainty in currency fluctuation.

“Yes, we are increasing our focus on localisation of inner parts. This will reduce costs and bring down our exposure to fluctuations in currency,” Shinzo Nakanishi, managing director of Maruti Suzuki India, told The Telegraph.

Of the 22 per cent components that the company imports as a value of its sales, 12 per cent are by Maruti and the remaining by suppliers.

“Increase in localisation will certainly promote investment, technology and employment in India. In the long run, it will be profitable for both parties. But in the end it all depends on the economics of a model and how large a scale is it selling,” said Vishnu Mathur, executive director, Automotive Component Manufacturers’ Association of India.

For companies such as Honda, the imported content in its Accord sedan ranges between 65 per cent and 70 per cent, while in the Civic, it is around 30 per cent.

“The rupee has depreciated almost 30 per cent since last year and increased the cost of importing components. Honda Siel had to increase the price of all its cars in April due to this currency fluctuation,” said Jnaneshwar Sen, vice-president (marketing), Honda Siel Cars India.

For Toyota, too, the imported content varies between 40 per cent and 45 per cent. The company has asked its R&D team to find ways to reduce the cost of its cars.

“Our engineering and R&D teams are working on ways to boost localisation. However, we believe that this cannot be done in a short time as we require high volumes for this,” said Sandeep Singh, deputy managing director of Toyota Kirloskar Motors.

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