Auto parts makers go slow on expansion

Leading component makers in India are cautious about committing huge investments for capacity expansion in the face of growing uncertainty over Euro IV emission norms and a possible hike in excise duty on cars. Senior industry executives say this careful stance by component makers is mainly due to fears that they could be stuck with large liabilities as the government hasn’t yet upgraded refineries to supply eco-friendly fuel. “Most auto manufacturers also fear that parts suppliers may not be able to gear up in time,” said Rakesh Batra, national leader (automotive practice) Ernst & Young. They admit that most makers have been facing parts shortages following a sudden spurt in year-end demand, he added. (December 21, 2009)