Auto industry is one of the worstly hit industry in this global economic turnmoil.Globally auto makers are bearing heavy losses from last three quarters and these looses make them think alternatives to remain exist in the market such as cost cutting ,entering into small segment cars and many others. .
For example Honda City manufacturer was able to make profit of 80-90 thousand on each Honda City now it slices down to 2700.
Big automakers are now using new strategy to cut prices on their vehicles manufacturing that they will buy auto parts for their small cars from the local manufacturers and after using them vehicles will be exported to other countries
By this firms will be able to keep prices competitive and will make profit which help in growing the auto industry.
European Car Major VW invested 3800 crore to establish their own manufacturing firm in India and they will source 70 -80% of their auto parts from local manufactures by this they will be able to keep overall cost low and the prices will remain modest.
Skoda is launching Fabia and betting big on local manufacturers for small car to keep cost low
Ford India who is launching their small car in 2010 and expect localization level of nearly 85 percent
As these Big names are now depending on the local manufactures definitely this strategy will bring some revive or energy in Auto industry from local manufacturers to Big names of this world
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