he CEO of DHL Lemuir Logistics on the opportunities and challenges for the industry in India and the need for closer collaboration between OEMs and service providers.
What is DHL’s growth strategy for India and the global market in 2010?
tThe global crisis has highlighted the need for change and re-engineering of auto supply chains to drive out cost. DHL is working closely with its customers to ensure that their priorities are addressed – by delivering scalable and sustainable solutions to capitalise on the opportunities. Our goal is to maximise our customer’s ability to take advantage of the economic turn. In India DHL has dedicated automotive teams that provide strategic consulting for a variety of customers – from international players seeking to expand their presence in the domestic market, to indigenous companies aiming to go global, servicing more than 50,000 customers across India. Customers can rely on DHL’s unique depth and breadth including DHL Express, Global Forwarding, Supply Chain and Blue Dart to provide them with integrated solutions and enhance their businesses and tap the vast potential of the Indian market.
How do you see the market for automotive logistics in India shaping up this year?
Auto markets in developing countries are under the spotlight as traditional centres of production and consumption are shifting to these developing markets, heightened by a number of factors. First, the industry has had a problem of overcapacity and the current global crisis accelerates the sizing issue. Coupled with increasing environmental pressures, government interventions and fuel spike, change is in the air. Experts predict that over five percent of growth in the automotive sector will occur in emerging markets through 2015 and India is at the forefront of the trend, playing an increasingly prominent role in the global industry; its automotive sector is expected to contribute 10 percent of its GDP by 2016.
What are the big opportunities and challenges facing the logistics industry in India?
What are the big opportunities and challenges facing the logistics industry in India?The market is far from saturation, even in developed countries. India is currently at the level that the US was in 1915. It is expected that volume per production plant will increase by 40 percent, with the number of platforms declining, and the number of vehicles produced per platform will increase by 80 percent. With emerging markets becoming the growth drivers for the next decade, it is expected to result in 50 percent additional sales and production. Emerging markets are expected to contribute 50 percent of industry growth, including India, by 2015. With the changing automotive landscape in India, there is a need for closer collaboration for the OEMs and logistics service providers. The challenges India faces includes its domestic transport infrastructure, pressure to reduce costs while making critical investments to compete with established automotive centres, while meeting newer, more stringent international regulatory guidelines.
What steps does the government need to take in order to make this industry more globally competitive?
International automotive companies come to India with the expectation to receive service quality comparable to what they experience in Western markets. The logistics infrastructure (both road network and transportation equipment) poses the biggest challenges to the growth of this industry in fulfilling the expectations of the global MNC players. Additionally, global players find it difficult to comprehend the complex tax laws that exist in India.
Will you be working with domestic or global players in this market? Who are your major customers in India at the moment?
We are already working with nearly all the major automotive companies in India, both multinational corporations and Indian.
What are the big trends that you see in the logistics industry in the next few years?
In the automotive industry, DHL has identified the key logistics factors in the three core areas of inbound to manufacturing, aftermarket and international supply chain that would determine the auto success stories in India in the near and long term.
What is your view about India trying to become a global production hub for small cars?
Much of the growth will be driven by India’s expansion as a small car hub, increased sourcing of component parts, expansion of the domestic dealer network, development of higher volume production plants and an increasingly global presence. With a forecast of three million passenger car production, India is set to become the seventh largest car producer by 2016.
How much dealer network expansion is planned over the next one or two years?
I don’t commit to any numbers but I believe we will at least double the number of dealers in India.
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