It took almost three decades for Maruti Suzuki to reach annual volumes of a million cars, but the market leader is confident that rapid domestic market growth will help it reach the next million in just the next three to four years.
Maruti aims to double volumes at home to 2 million cars and utility vehicles by 2016, helping it maintain a 40% share of the market it projects will touch 5 million units by the time, top company executives, including chairman RC Bhargava told suppliers at a conference in Malaysia earlier this month.
With annual output currently at about 1.2 million units across at its Gurgaon and Manesar plants, the major chunk of the fresh capacity about 0.5 million cars from two lines will come from its upcoming 1,200 acre mega twin-facility in Gujarat by 2015-16. Meanwhile, the Manesar plant will add a third and the final line later this year with a capacity of 2.5 lakh units a year.
The company wants to maintain a 40% market share, for which it aims to sell about 2 million by 2016. For this the Gujarat plant, will have to manufacture at least 5 lakh units a year, if not more. It has asked vendors to be tuned to this number in terms of investments on capacity, while improving quality and reducing costs, a leading supplier said.
So by 2016, the twin Haryana plants would annually make 1.5 million cars, the rest 0.5 million being produced at Gujarat. In fact, the latter is being developed by Japanese parent, Suzuki Motor, as a global small car export hub especially for emerging markets in Africa and South-east Asia.
Bhargava confirmed the development, We have given our projections on the basis of the last three years and not only the last year which was bad for the industry and does not indicate the future. Gujarat will likely see two plants coming up which together will produce half a million cars, but the final expansion plans will depend on the market demand over the next two years.
For the entire FY13, Marutis market share stood at 39%, though in the last quarter (Jan-March 2013) it had climbed to around 41%. Last fiscal, sales had grown 4.44% at 1.05 million units largely on the back of high demand for its diesel variants for the Dzire, Swift and Ertiga. With a 1.5 lakh unit fresh diesel engine capacity being added this year, it hopes volumes to grow 6% in FY14, matching the industry growth projections of Siam.
To maintain market share, the company aims to launch new variants or vehicles every three months, sources said. Among new models being planned over the next few years, a new hatch back (YL7 code) will be launched early next year to replace both the Estilo and A-Star, with a new sedan (YL 1) following soon after positioned in the C-segment above the Dzire. A compact SUV is also scheduled for 2015, apart from the new SX4 which will grow larger in size and move up segment to compete with models like the Honda Civic.
Maruti shares at the BSE closed up 2.07% at R1,739 on Wednesday.