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Maruti Suzuki is increasing capacity at its Gurgaon plant by 50,000 units to around 9 lakh units this year. This is even as it expects sales growth in the fiscal to taper down to single digits due to a negative market sentiment on the back of rising interest rates and fuel prices.
An increase in capacity at its older facility will help the carmaker meet the high demand and reduce waiting periods for models such as the Swift Dzire sedan, the production of which was transferred from its other nearby plant at Manesar last month.
Freeing capacity
The company is also freeing up further capacity by reducing production runs for models that are currently low in demand, such as the Alto small car. On paper the Gurgaon plant has an annual capacity to make 7 lakh units, but through efficient practices Maruti is currently able to make 8.5 lakh units a year.
Mr Shashank Srivatsava, Maruti's Chief General Manager of Marketing, told Business Line , “The fresh capacity is being added through reorganisation of manpower and space. This will help reduce waiting period, especially for the diesel Dzire, which stretches up to five months.
“For some models, the volumes have dropped – the Alto sold 25,000 last month after going as high as 36,000 in March this year.”
Sales dip
He added that growth in the year is also expected to slow down to single-digits on the back of a 5 per cent drop in domestic sales that has already been witnessed in the first four months of the 2011-12. The company, which saw a record sales drop of 26 per cent in July, expects a turnaround with the festival season in September. In the previous fiscal, sales at home grew 30 per cent at 11.32 lakh units.
New market segments
In order to protect its falling market share as the car market sees increased competition, Maruti aims to target new market segments such as multi-utility vehicles (MUVs). A new diesel-powered UV model, based on the RIII concept shown last year is due for launch in 2012.
“With the two new production lines coming up at Manesar (the first of these is expected to start from this September), we will have the capacity to maintain our market share of around 50 per cent through to 2015-16. We have to be dominant in all segments – it depends on what products we introduce and how we read trends.
“The van segment is of interest for the future where Eeco has done well. Another important market is MUVs, where we are not present,” Mr Srivastava said.
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