It took Maruti Suzuki India Ltd. four decades to build an annual production capacity of two million units. Now, it aims to double that in less than a decade.
“We did two million units (per annum) in 40 years. We aim to double that—from 20 lakh to 40 lakh—in the next seven years,” Rahul Bharti, executive director (corporate affairs) at India’s largest carmaker, told NDTV Profit on Wednesday. “So, what we did in 40 years, we will try to replicate that in seven years.”
For context, 40 lakh units is the current size of the world’s third largest car market.
On Tuesday, Maruti Suzuki informed the stock exchanges that it has—for the first time—manufactured 20 lakh cars in a calendar year. The Swift maker is the only Indian car maker and the first among Suzuki Motor Corp.’s global partners to achieve this production milestone. In fact, countries like the United Kingdom, France, Italy, Canada and Brazil have less car-manufacturing capacity than one company in India.
Maruti Suzuki aims to set up two new car plants—one each in Haryana and Gujarat—to make 40 lakh units per annum by March 2031.
The company, at present, operates three manufacturing facilities—two in Haryana (Manesar and Gurugram) and one in Gujarat (Hansalpur)—with a total installed production capacity of 23.5 lakh units per year. A fourth car factory is under construction in Sonipat, which when fully operational will have an annual production capacity of one million units. The first phase, with an annual production capacity of 2.5 lakh units, will go onstream in 2025.
Additionally, Maruti Suzuki is scouting for land to set up a fifth facility in Gujarat that will also have a total manufacturing capacity of 10 lakh units per year.
Sales Blip
To be sure, Maruti Suzuki’s production milestone has come amid lacklustre sales in 2024.
Its breadwinner small cars are finding few takers with each passing month, and SUVs are facing intense competition from the likes of Hyundai Motor India Ltd., Tata Motors Ltd. and Mahindra & Mahindra Ltd. In January-November 2024, the company produced 18,69,777 passenger vehicles and sold 14,97,319 of them. That’s a gap of 3,72,458 units, which raises the spectre of an inventory overhang going into 2025. The company itself has guided for a low single-digit growth in the fiscal ending March 2025.
“Temporarily, we have less annual rate of growth. We can possibly do much more, but that should not hide the larger picture that India has a very high base already,” Bharti said. “We still have a long way to go because car penetration in India is just 32 per 1,000 people. In developed countries, that’s 600 for every 1,000 people. We have a long way to go.”
But Indians are shunning small cars—crucial for the graduation to four-wheeled mobility from two-wheeled—and opting for SUVs instead.
“India is seeing a kind of K-shaped growth where larger cars are growing at a faster rate but small cars are lagging,” Bharti said. “But as the largest carmaker, we are focused on the compact car segment as well. And we will try all means to make the segment lucrative for our customers.”
“Sooner or later, given the base of the pyramid, going by simple economics, the small car segment has to come back,” he said, without giving a timeline for the revival.
According to Bharti, India’s two-wheeler market is six-to-eight times that of the car industry. Five years ago, it was probably 10 times. “So, all those people who are buying two-wheelers would at some point of time, maybe in a decade, want to come to cars. And we should provide entry-level cars for them.”
In the meanwhile, Maruti Suzuki is offsetting the domestic slowdown with higher exports, and sales to Toyota Kirloskar Motor India Pvt. Ltd. as part of the global Suzuki-Toyota alliance.
“Exports and sales to Toyota India are a means to de-risk the muted demand in India,” Bharti said. “We were doing 100,000 units just about three years ago. From that, we have reached a level of three lakh units. From the current level, we aim to grow exports to 7,50,000-8,00,000 units by the turn of the decade.”
“The current slowdown is but a blip in the upward trajectory of car sales in India,” Bharti said, exuding confidence that the industry will clock more than four million units in 2024. Last year, that figure stood at 42 lakh and made India the world’s third largest car market. “We think India (car industry) has a long runway of growth.”
. Read more on Business by NDTV Profit.Maruti Suzuki plans to set up two new car plants in Haryana and Gujarat to double its annual production capacity to four million units by 2030-31. Read MoreBusiness, Notifications
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