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Renault to Double Use of Indian Parts Overseas to Cut Costs

May 10, 2010, 11:32 PM EDT

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By Vipin V. Nair

May 11 (Bloomberg) -- Renault SA plans to more than double shipments of parts from India, cutting costs and boosting ties with suppliers as it reenters Asia’s third-biggest auto market.

The carmaker will buy as much as 250 million euros ($320 million) of Indian components for use overseas in 2013, compared with 75 million euros this year, Sudhir Rao, chief operating officer of the company’s Indian unit, said in an interview in Mumbai yesterday. Last year, the carmaker bought 10 million euros’ worth, he said.

Nissan Motor Co., Fiat SpA and Ford Motor Co. also plan to use more India-made parts overseas to benefit from costs that Rao said are as much as 15 percent lower. Renault is also preparing to build cars in India on its own after scrapping a venture with Mahindra & Mahindra Ltd. because of tumbling sales.

“You are building relationships with the suppliers which will help in future when your own production starts.” said Deepesh Rathore, a New Delhi-based analyst at IHS Global Insight Inc. “This is very important for any company entering the Indian market.”

Renault, France’s second-biggest carmaker, will ship the India-made parts to factories in countries including Romania, Turkey and South Africa, Rao said. Affiliate Nissan will buy $40 million of parts from India in 2012, Kiminobu Tokuyama, head of the Japanese automaker’s local unit, said in March. Nationwide parts exports grew 10-fold in the past decade to an estimated $3.8 billion in the year ended March 2009, according to the Automotive Component Manufacturers Association of India.