Maruti defies slump, plans to double exports

Written by Corporate Bureau | New Delhi | Updated: May 5 2009, 06:12am hrs
Despite slowdown in global demand for automobiles, Maruti Suzuki India has set a target of almost doubling its exports in the current fiscal. The company is eyeing to export 120,000-130,000 units in 2009-10, and huge part of it (around 1,00,000 units) would be the A-Star variant. Maruti had exported 70,022 units in 2008-09.

In spite of the European economy passing through a bad phase, some countries are offering incentives for replacement of older cars. Consequently, there has been an additional order from Nissan for A-Star, says Shinzo Nakanishi, managing director of Maruti Suzuki India (MSI).

According to Nakanishi, as demand for smaller vehicles continues to grow, the company aims to export 1,00,000 units of A-star in 2009-10. While 60,000 units would be exported to Europe, 10,000 would be exported to non-European countries and the remaining 30,000 units would be sold to Nissan as part of the company's agreement with the latter. The company has earmarked another 40,000 units of A-star for the domestic market.

Maruti, which is all set to launch Ritz in India, is also eyeing up to 5% growth in the domestic market in 2009-10 on the back of increased demand from rural India. The Society of Indian Automobile Manufacturers (Siam) had projected the industry to grow by 3-5% in the current fiscal. I'm sure MSI should also grow between 3% and 5%, but our hope is to do better than that, said Nakanishi. But the double-digit growth is certainly tough to attain this year, he feels. Rural contribution to the company's overall sales has gone up to 8.5% in the last fiscal from 2.5% in 2007-08.

Ritz, which was showcased at the auto expo in January 2008, would be launched in India this month. The car that would be available in 1.2-litre petrol and 1.3-litre diesel options would be positioned as a premium compact car in the country and will be rolled out from the company's Gurgaon plant.

As per Siam, Maruti registered a 1.45% jump in sales in 2008-09 at 7,22,144 units as against the 1.31% growth in the passenger car industry at 12,19,473 units vis--vis 12,03,733 units. The overall automobile industry, however, remained flat at 97,23,391 units as compared with 96,54,435 units in 2007-08.

The company is also planning to make fresh investments, after the earlier announced Rs 9,000-crore capex comes to an end in 2010, in non-production activities such as research & development and marketing initiatives.

Setting up stockyards for both, finished products and spare parts, at regional level is high on the agenda so as to reduce the delivery time to our customers, Nakanishi said, adding that the company is in advanced stages of negotiation and its first stockyard will come up in South India by the middle of this year.

With increased focus on automation, while the company has frozen hiring at other levels, it will continue to increase workforce at its sales division as well as strengthen the R&D division. Maruti will add another 1,000 dealer sales executives in 2009-10 and increase the R&D workforce from 740 to 1,000 by 2010, he added.