The work to develop a fully indigenous car model from the Maruti Suzuki stable is underway. However, the company is yet to fix a specific timeline for it, a company insider said. When contacted IV Rao confirmed that he was heading a team of specialised R&D experts. He said, So far we (Maruti Suzuki) have been manufacturing cars in India but we are also looking to get into product development which will also be done here. Rao, however, refused to divulge the precise time period for the launch of the car.
The company has also recruited top engineers from US auto companies in Detroit. The new team of engineers having skill sets across diversified fields and will work under Rao and Asahi to deliver the car. The cars rolled out would first be tested in the European markets before they get launched in India.
Sources further added that the development was significant since it could save the company a substantial amount of money that it pays to Suzuki Motors as royalty for using its technology. In August, FE had reported that once Maruti Suzuki's R&D centre at Rohtak in Haryana is fully developed by 2015 then it could start demanding a royalty from its Japanese parent thereby reversing the current trend. RC Bhargava, chairman Maruti Suzuki had told FE, There is logic in Suzuki Motor paying a royalty to Maruti...the issue is bound to be addressed at an appropriate time.
Maruti's first quarter net profit had dipped 20% on account of higher royalty pay out to Suzuki. It paid a royalty of Rs 188.70 crore or 5.9% of its total revenues during the quarter. This included some arrears too, which were on account of the royalty being revised because the government removed the cap of 5% on sales in domestic market and 8% on overseas sales. This enabled the Japanese parent to revise royalty rates.
The R&D centrethe first outside Japanis coming up at Rohtak at an investment of Rs 1,500 crore. Spread over 700 acre of land, the first phase of the project is estimated to be completed by 2012. The company had stated in August 2009 that Maruti Suzuki is going to design and roll out a car that would be totally developed in India.