One U.S. OEM Betting Big on Emerging Markets?

U.S. auto makers still may be a little gun shy when it comes to pulling the trigger on new-product development as the industry slowly fights its way out of a recession that wiped out 40% of annual new-vehicle sales.

But they appear to be far less reticent in green-lighting investment in emerging markets - at least in the case of one unidentified car manufacturer.

Karthikeyan Natarajan, who heads up the Integrated Engineering Solutions Practice for Mahindra Satyam, says in a phone interview from India that product-development money, hard to come by during the peak of the global downturn, is beginning to shake loose.

But so far, European auto makers are showing more confidence in the future than their North American competitors.

Natarajan says his European customers are firming up product plans and beginning to dole out supply contracts for programs that run late into the decade.

But then Natarajan drops a bombshell, saying his firm has started to get “some interesting opportunities” to help auto makers set up plants in emerging markets, including one unidentified U.S. OEM that may be about to embark on an extensive capacity-expansion program overseas.

“One of the North American OEMs wants to have about 20 factories set up in 20 countries, essentially all emerging economies,” he says. “They've figured out these are the countries they really want to scale up their manufacturing (capacity) as they try to increase their footprint in the local markets.”

Mahindra Satyam is bidding on contracts to help design automation systems and set up the plants. Natarajan does not indicate the size or extent of the manufacturing operations, which presumably would vary from market to market.

The new-plant rollout is targeted for completion in the next three to five years, he says, but “maybe four to five plants will come up in the next year.”

Dave Zoia is editorial director for WardsAuto.com and has covered the global auto beat for more than 25 years.

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