Companies

Suzuki Motor Gujarat starts third plant with 2.5-lakh-units capacity

S Ronendra Singh New Delhi | Updated on April 05, 2021

Difficult to predict how demand will pan out in next 12 months, says Maruti Chairman RC Bhargava

Suzuki Motor Gujarat (SMG), a 100 per cent subsidiary of Suzuki Motor Corporation (Japan), recently started its third plant (plant C) with a capacity of 2.50 lakh units per annum. This new plant comes at a time when Maruti Suzuki is faced with muted demand for cars in the domestic market, largely due to the slowdown caused by the pandemic.

With the new plant, the total capacity for SMG per annum in Gujarat will become 7.50 lakh units and with Maruti's other plants (Haryana) put together at 1.5 million units, the total capacity for Suzuki in India will become 22.50 lakh units per year.

One shift

But, will there be demand — both domestic and exports — for so many cars? According to RC Bhargava, Chairman, MSIL, this year the production may reach between 1.50 lakh and 1.60 lakh units at the facility. The new plant will start with one shift and as demand grows, it will gradually increase production, to reach the full capacity, he said.

“They can’t make 2.50 lakh units from day one. It takes time to go to full production and the normal practice is to start with one shift only. And, then after some time when that is fully stabilised and the people are ok, then you go on a second shift as the volumes grow gradually,” Bhargava told BusinessLine.

He said the market is still uncertain and so one has to wait and see how it goes.

“We have to wait and see how it goes. Nobody knows what can happen in 12 months.. The market has come back to what it was two years ago, that's all. So we are really excited that the demand is coming back, but we have to remember what it has come up to...what it was in 2018-19,” he said.

SMG production

Suzuki established SMG in March 2014, aiming to secure production ability in preparation for the automobile market growth in India, as well as for exports. Plant A started operations in February 2017, and the Plant B and Powertrain Plant in January 2019.

In October 2020, SMG became the fastest production site of Suzuki to achieve accumulated automobile production of one-million units.

“With production starting at Plant C, which has an annual production ability of 2,50,000 units, together with Plant A and Plant B, the total ability of SMG will be 7,50,000 units,” SMG said in a statement.

Together with Maruti Suzuki’s production ability of 1.5 million units, Suzuki’s production ability of automobiles in India will be 2.25 million units, it said adding that all automobiles that will be produced in SMG will be supplied to Maruti Suzuki.

Market share

According to analysts, SMG will help MSIL gain around two per cent market share in the long term as Suzuki plans to make India a base for its exports.

“Suzuki will get benefits under the PLI scheme also for this facility. This addition would give MSIL the advantage of outselling its cars from its closest competitor Hyundai Motor India as Hyundai does not have additional capacity and its Chennai plants are running in full capacities right now,” Puneet Gupta, Director Automotive Forecasting at IHS Markit, said.

MSIL sold 12,93,840 units in the domestic market last financial year (2020-21), down 8.5 per cent compared with 14,14,346 units in 2019-20.

Published on April 04, 2021

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