Even as India and China are fighting tooth and nail for global market share, the auto component sector in both the countries is eying the large US auto market. Auto markets in China and India are growing and with this the number of auto parts that companies in these countries send to the United States is also likely to go northwards.

Last year, US companies imported $43.2 billion in parts, with Canada, Mexico and Japan leading the way. China and Germany were tied for fourth place last year, accounting for a little more than 5% of US auto part imports. For the first three months of 2007, China topped Germany.

Auto suppliers in China increased their exports by 38% in 2006 and 30% during the first quarter of 2007.

Meanwhile, in India, the passenger vehicle market grew 27% last year to 1.4 million sales. With this growth, companies expect India to become one of the leading nations to export parts to the United States.

Over the next seven years, experts expect India to pass Italy, France, South Korea, all of them, for parts into the United States.

India is expected to be the fifth largest auto market in the world by 2013, outpacing South Korea, France and Brazil, and surging from its 2005 ranking of 15th largest auto market.

The growth coming from these countries is expected to lead to North America, Europe and Japan — which in 2002 accounted for nearly three-quarters of the auto market — to see their combined global share drop to a little more than half of the market by 2012.

Amid these changes, financial distress is found across the auto industry.

On both sides of the world — in North America, as well as in developing markets China and India — more than a quarter of auto suppliers are in financial trouble.

But they face different auto markets. In China and India, the challenge is finding the financing to keep up with growing demand and new contracts. Auto suppliers in North America are in a more mature auto market, where they are searching for new sales.

Mr. Divya Aggarwal

Money Management Consultants Ltd

Senior Copy Editor, Money Management Consultants Ltd
New Delhi, India

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