Over the past two decades, Vivek Chaand Sehgal has used strategy and innovation to create a global auto ancillary behemoth. Now, as headwinds mount for the car industry, he is well prepared to battle future challenges
A section of the top management of Motherson Sumi, India’s largest auto ancillary firm—including Chairman and Co-founder Vivek Chaand Sehgal—has proactively been visiting the manufacturing plants of Netherlands-based auto parts maker Reydel in Argentina.
The company, acquired by a subsidiary of the listed Motherson Sumi Systems in August, is the latest to join the large family of companies—now 21—that form the Samvardhana Motherson Group, to which Motherson Sumi Systems Ltd (MSSL) belongs.
Renamed Samvardhana Motherson Reydel Companies after being acquired, the acquisition will provide Motherson Sumi the ability to expand its presence in Argentina, Croatia, Morocco and the Philippines at one go.
But despite the string of exciting developments and acquisitions, it’s not all smooth sailing for the auto ancillary firm. In fact, Motherson Sumi could well be on the cusp of one of the most critical phases of its 43-year-old corporate history. This is because the demand for passenger cars across key markets is starting to slow.
China, the world’s largest car market in terms of demand, in November reported an 11.7 percent drop in car sales to 2.38 million units for the month of October, the fourth consecutive month of year-on-year decline, according to the China Association of Automobile Manufacturers. This is due to slowing growth in China and the impact of a frosty trade relationship between China and the United States.
Ford, Toyota, Nissan and Honda have all reported a bumpy trend in monthly car sales in the US. In the UK, Volkswagen—whose group accounts for 35 to 40 percent revenues of Motherson Sumi—reported lower September sales in five of its key markets in Europe, as tighter emission testing rules take force. Jaguar Land Rover and BMW have warned of closing some of their factories in the UK for around a month in April 2019, due to uncertainties over Brexit.
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