Maruti Suzuki to build Gujarat plant

In early 2013, Maruti Suzuki India Ltd., the local unit of Suzuki Motor Corp. will begin construction of its third factory in India. The new factory will be Maruti’s first factory outside the northern state of Haryana. The new plant will be built in Gujarat, which has a long coastline. Since Maruti exports its cars to more than 125 countries, the company said the Gujarat plant would help it save on logistics costs in shipping its cars overseas, especially to Europe.
The Rs40 billion (US$740 million) Gujarat plant will have an initial annual capacity of 250,000 cars a year when it opens in the financial year starting April 1, 2015. Maruti expects to eventually increase the plant’s capacity to 2.0 million vehicles a year.
Although many carmakers in India are grappling with a slowdown in the domestic market, Maruti said the new plant will meet potential growth in demand for its vehicles locally and overseas.
Maruti Chairman R.C. Bhargava said that due to the current slowdown in India and uncertainties over the pricing of diesel fuel and gasoline, local car sales will likely grow in single digits during this financial year and the next.
In the financial year that ended March 2012, the company posted an 11% decline in vehicle sales to 1.13 million units. However, Maruti expects car sales to grow by 6% during the current financial year, which ends March 2013. Bhargava said that consumer demand for diesel cars is continuing to grow; furthermore, diesel cars are preferred over gasoline models in Asia’s third biggest economy because the government regulates and subsidizes the price of diesel fuel, which is currently 30% cheaper than gasoline at retail outlets in New Delhi, India’s capital city.
Faced with lower sales in Europe, the company is diversifying into other markets such as Indonesia, Middle East and Africa. During the current financial year, it expects to ship about 25,000 cars to Algeria, and some 40,000 completely knocked-down kits of its cars to Indonesia. (December 22, 2012)