Japan calamity to impact auto component supplies

Mumbai: Auto major, Mahindra & Mahindra (M&M) on Thursday said there would be an impact on auto component supplies this month due to the calamity in Japan but it will not impact the sales of the company.

"Yes, imports of some automobile components from Japan are likely be affected this month (March) because of the recent earthquake and tsunami in Japan. But I do not think it (Japan situation) will have an impact on the sales of our company," Mahindra and Mahindra`s Automotive President, Pawan Goenka, told reporters here.

The Japan earthquake and tsunami have been devastating for the automobile industry and also hit the component supply industry.

Goenka, who has been appointed as Chairman of South Korea`s Ssangyong Motor Company (SYMC) said the company plans to set up assembly unit for SYMC vehicles at Chakan near Pune by end-this year.

"We are planning to set up assembly unit for SYMC vehicles at Chakan near Pune by 2011," he said, adding the investment would be less than Rs 100-crore.

Mahindra has taken control of the South Korean car-maker after buying a 70 per cent stake in it.

Mahindra, which emerged as the preferred bidder for SsangYong in August 2010, will now hold a 70 per cent stake in SYMC, for which it has shelled out USD 463-million (about Rs 2,105-crore).

The company plans to launch two vehicles – the Rexton and Korando-C in India by end-this year and also plans to set up operations of its finance arm, Mahindra Finance, in Korea to boost sales of SsangYong.

"We will launch Rexton and Korando-C in India by 2011," he said, adding "we will send a team to Korea soon for setting up of our finance arm there."

"There are some regulatory issues to be sorted out before we can set up our finance arm there," he said.

Goenka described today`s rate hikes by the Reserve Bank as "a matter of concern" as it could affect automobile sales.

The Reserve Bank today upped both its repo and reverse repo rates by 0.25 per cent each to 6.75 per cent and 5.75 per cent, respectively.

Over the last few months, car-makers have jacked-up prices of cars following a rise in input costs.

"Commodity prices have been increasing of late and now we have the Japan calamity which will affect supplies of auto components. The RBI`s rate hikes coming at this time is a matter of concern," Goenka said.