Fiat drives into India in 'best-cost' country search

Supply Management, May 22, 2008 by Kanter, Jake

[Automotive]

Fiat has set up a group purchasing office in India as part of a strategy to centralise its buying operations.

The Italian motor group, which includes brands such as Alfa Romeo and Maserati, plans to buy euro8.5 billion (£6.7 billion) worth of components from what it terms "best-cost countries" by 2010.

The firm has already set up a global sourcing office in Shanghai, which now employs 100 staff, as the company hopes to make best use of its euro34 billion (£27 billion) annual spend (News, 27 March). The firm is planning to open a similar office in Russia.

The centre, situated in New Delhi, will be managed by country head Niraj Hans. It will be run by a team of 15 buyers, but this will increase to 50 by the end of the year.

Speaking at the launch, Gianni Coda, senior vice-president of Fiat Group Purchasing, said the firm is optimistic about sourcing from the country. He added establishing and strengthening strategic relationships with suppliers in India will be crucial to plans for the company's growth.

Last month, John Hoffecker, managing director of consultancy AlixPartners, told delegates at the annual Global Automotive Conference in the US that sourcing in countries such as China and India remained an attractive prospect for the automotive industry.

But he warned: "All auto companies and suppliers, no matter what their origin, need to be more fully aware that outsourcing parts purchases and manufacturing to countries such as China is no longer as simple a calculation as it once was."

He argued buyers must take into account "dramatic shifts" in currency exchange rates and rising labour costs.

Jake Kanter

jake.kanter@supplymanagement.com