Auto Outsourcing !#@?

We have heard about BPO , KPO but AO (Automobile Outsourcing ) ?? When I read about it sometime back I thought this is a good chance to write my first blog :).On closer analysis this model made sense to me as well.
Well to people who are hearing this for first time, by Auto Outsourcing we mean outsourcing automobile manufacturing to third party vendors whereas the design will be done by the original automobile manufacturer.
One may ask why on earth will manufacturing be outsourced? Good reasons I can think of are
1) the original automobile vendor does not have to invest in setting up a manufacturing plant in foreign countries to enter into the market.
2) Automobile manufacturer does not have to think about volume margins.

When we talk of Auto Outsourcing one company that comes to my mind is Magna Steyr.This company has bagged orders from BMW as early as 2003 when BMW announced the launch of X3.Magna Steyr will be actually manufacturing X3 till 2010. Infact BMW is not the only client for Magna Steyr .Audi ,Mercedes( and Daimler Chrsler),Volkswagen and Jeep are all its clients.(Courtesy: Wikipedia) And the other interesting aspect is that this company has its presence in India as well (in Pune to be precise).

So how does this business model impact Indian automobile component manufacturing companies? Well Indian companies are already supplying components to well known automobile manufacturers.So the next big step for them is to make it big by bagging subcontracts from the existing car manufacturers.
Time is not far off when Indian companies will play an active role in this space as well. One thing to be taken care of is that automobile manufacturing is not a clean industry(when pollution is considered) and also it needs better infrastructure for the industry to grow.Excellent port facilities should be available from where the automobiles can be exported.There should be proper cargo handling facilities.This is one more reason for Indian Government to seriously think of improving the infrastructure.
As time goes by the subcontractors can even graduate to individual automobile manufacturers and in turn build their own brand. So will the big boom for India come from one of its core industry ....Lets wait before passing our judgements :)