Ross sees expansion into India

DETROIT (Reuters) - Billionaire investor Wilbur Ross said on Sunday he expects to expand the International Automotive Components Group companies into India in 2008 and is mulling establishing a separate parts supplier as well.

Ross, who has been building three separate auto parts companies after prior moves into the steel and coal sectors, also said the U.S. housing market downturn would contribute to further consolidation in the industry.

Ross said the company's move into India could be through construction of new facilities from the ground up, a joint venture with existing companies, or by acquisition.

"India's a very major market, one with very rapid future growth where we have not done very much," Ross said. "We've been getting a lot of encouragement from the (automakers)."

The IAC Group, which includes several auto interiors businesses acquired from Lear Corp (LEA.N: Quote, Profile, Research, Stock Buzz) and former parts maker Collins & Aikman Corp, expects to report revenue of about $6 billion in 2008, Ross said on a phone interview for the Reuters Autos Summit in Detroit.

The IAC Group's revenue could expand to $10 billion to $15 billion over time, Ross said. Having just completed Collins & Aikman acquisitions, the company has not yet set out a full three-year plan, Ross said.

"We are still in the building mode," Ross said.

Much of the IAC Group growth will come internationally, with a focus on India, China and Eastern Europe, Ross said.

IAC is pretty well positioned in Western Europe and the United States, where most of the growth in car sales is based on population increases and vehicle replacements, Ross said.

China and India provide potential for vast growth with only a small number of cars per 1,000 people of driving age and the probability that producers in those countries eventually will export to the West, he said.

Ross said he did not have plans for a public offering of the IAC Group, which includes Lear as part of the joint venture, in part because the company is debt free at this point and is not currently in need of raising capital.

Ross has been building separate parts companies focused on interiors, autobody frames and passive safety equipment such as airbags and seat belts, and is considering another company that would complement those areas, he said. He declined to specify what additional area in the parts sector he was considering.

He sees further stresses on U.S. auto parts makers due to pressure from the U.S. housing market downturn and quite a bit more consolidation.

"The sector is probably operating at only 70 percent of capacity," he said. "I think the industry is still overpopulated."

Several large U.S. auto parts makers filed for bankruptcy in the past three years, including Collins & Aikman, Tower Automotive Inc, Delphi Corp (DPHIQ.PK: Quote, Profile, Research, Stock Buzz) and some metal stampers. Tower was sold to Cerberus Capital Management LP , Collins was liquidated and Delphi expects to emerge from Chapter 11 bankruptcy in the first quarter of 2008.

Some companies that exited bankruptcy are likely to return a second time into "what we call Chapter 22," Ross said.