Volkswagen is aiming to source more parts from Indian suppliers. They plan to use the parts throughout their global operations, not just in a few selected regions.

Nearing 300 million Euros spend in India

Volkswagen aim to spend 300 Euros million over the next 3 to 5 years in terms of sourcing components in India. This would in effect triple their annual part sourcing in the country.  This will mean their amount of suppliers being doubled to 200 plus.

Positive effect on the Volkswagen UP!

The move comes as the company are looking at more cost effective ways of gathering parts. Associated Indian suppliers are set to receive more business, further adding to India’s current automotive industry prospects. The Volkswagen UP!, which is due for release in the country over the two and three years will be produced with more local supplies thanks to the German Giants new supplier plans.  This will help the car’s price to be a lot lower and priced at a more competitive rate compared to rivals. Current market leaders in terms of small cars have been difficult to catch up to. Using Indian supplies is sure to have a great impact on the potential success of the vehicle.
The Executive Director for components purchasing for the Volkswagen Group India Mahesh Kodumudi said “We are still seeing India as a very competitive sourcing base – there’s a cost advantage of at least 10-15% over Western Europe. And having worked with Indian vendors over the past few years, their capabilities too have matured and we do see them playing a bigger role.”
At present Volkswagen source engine and transmission parts, metallic components, sheet metal and power train components. In terms of plastic parts, the company are said to be sourcing around 50 million Euros worth of them per year.
Volkswagen will eventually aim to source near to 1 billion Euros worth of parts from India. They will be used not just for India, but for operations around the world, as mentioned earlier.

At the moment, approximately 70 to 80 billion Euros worth of part sourcing takes place around the world. Gathering the parts makes sense in terms of saving money whilst gaining quality parts as well as increasing the competiveness of their cars in India