GM outsourcing.

GM to buy Indian auto parts worth US$1 billion a year by 2008

General Motors Corp. plans to buy $1 billion US worth of auto parts from India each year by 2008 as part of cost-cutting efforts at the world's biggest automaker, a senior executive at its local subsidiary said Friday.

GM currently buys about $120 million worth of parts from India each year, and the plan to increase those purchases should result in major savings for the carmaker, said P. Balendran, vice-president of General Motors India. "Auto parts in India cost 25 to 30 per cent less than in North America or Europe," Balendran was quoted as saying in a media report. "They are also around 15 per cent cheaper than South Korea and Mexico, but the quality is on a par."

GM India Ltd. is a wholly owned subsidiary of GM, which is based in Detroit. GM currently buys auto parts, such as castings and forgings, from around 110 suppliers in India.

GM is among several automakers - including Ford Motor Co., DaimlerChrysler AG, Volkswagen AG, Volvo AB and Mitsubishi Motors Corp. - that are sourcing auto parts from low-cost countries like India because of tough competition and rising costs of raw materials.

The Automotive Component Manufacturers' Association, a leading Indian trade body, has forecast that auto parts exports from the country will grow to $2.7 billion by 2010 from the current levels of more than $1 billion.

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