Car companies are switching to centralised sourcing for their global manufacturing operations. The escalating prices in raw materials have led to increased input costs. Italy’s Fiat Company has already started its global sourcing operations by opening its International Purchase office in the country.

“We are looking at efficiency of prices as components from India and China are cheaper by 10% to 15%. We are looking at long-term sourcing for all Fiat group companies to leverage better prices from local suppliers. Larger volumes for the entire group help us to control raw material prices, which have taken a steep rise in the past few months.” said Gianni Coda, Chairman and CEO for purchasing operations.

Fiat has increased its sourcing target rom Rs 200 crores to Rs 1600 crores by 2010. It currently purchases components worth Rs. 4800 crores from Eastern Europe, North Africa, India and China.

Other major car giants like Ford, General Motors, Suzuki are also tapping global markets to centralise their sourcing operations for their manufacturing units worldwide. Soon Suzuki may also adopt a global sourcing policy. GM also plans to set its sourcing targets to Rs. 4000 crores in India. Ford India shall also soon start its component sourcing from India.