Maruti Suzuki, dealers may invest Rs 30k crore to sell 3-mn cars a year

Maruti Suzuki India (MSI) and its dealers could invest up to Rs 30,000 crore to double its infrastructure, including establishing new dealerships, as it aims to sell 3 million cars annually.

By: | Updated: March 20, 2016 8:37 PM

Maruti Suzuki India

While Maruti Suzuki did not set a time line for selling 3 million cars annually, it has stated that it is looking at selling 2 million cars a year by 2020. (Photo: Reuters)

Country's largest carmaker Maruti Suzuki India (MSI) and its dealers could invest up to Rs 30,000 crore to double its infrastructure, including establishing new dealerships, as it aims to sell 3 million cars annually.

While Maruti Suzuki did not set a time line for selling 3 million cars annually, it has stated that it is looking at selling 2 million cars a year by 2020.

"I see Maruti investing money in R&D, in building and all the required infrastructure for selling larger and larger volume of cars because if we are to sell 3 million cars we have to double this entire infrastructure," MSI Chairman RC Bhargava told reporters here.

When asked by what time the company aims to sell 3 million cars annually, Bhargava said: "Maybe 8,9 or 10 years. I really don't know. It will depend on the market conditions."

The same infrastructure that exists today cannot sell 3 million cars so the company needs to invest in creating that infrastructure, he added.

Bhargava said the infrastructure that MSI has created since 1983 cost around Rs 11,000 crore. MSI currently has around 1,700 dealerships across the country and has also set up an R&D centre at Rohtak in Haryana.

"The cost today, when we start doubling this infrastructure from 2016 is going to be much much higher and that figure which we have estimated could be something close to Rs 25,000 crore to Rs 30,000 crore," Bhargava said.

Part of the total envisaged investment will be done by dealers and part of it by the company, he added.

The Indian car market leader currently has a production capacity of 1.5 million across its two manufacturing sites in Gurgaon and Manesar.

Bhargava said that the company would be launching models frequently in the domestic market.

"The average life of a model these days is six years. A product is required to be replaced every six years. Every three years a model needs to refreshed or minor changes. So today we have 14-15 models, one sixth of them will be replaced every year and another one sixth would be refreshed every year," he said.

When asked about the Supreme Court order banning registration of cars above 2,000 cc in Delhi-NCR, Bhargava said it creates an uncertain situation.

"The one thing industry likes, and all industry likes, is certainty. Irrespective of what it is you want to be certain of what is going to happen. Where you get into uncertainty, and whimsical action and changes then it becomes very difficult for any industry. Industry needs a stable certain environment," Bhargava said.

He further said: "Some companies have invested large amount of money in diesel cars. Somebody has to consider what happens to these people. They have shareholders. They will get badly affected.

"It is not only Mr Mahindra, Tata or Mr Ford who will get impacted. There are lot of shareholders who get affected. Somebody will have to think about them also."

On company's future plans about diesel cars, Bhargava declined to specify saying, "I don't know what the policy is going to be. I have to react to the market. If I know what is going to happen in the next six months, I can tell you."

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