Maruti Suzuki will double production capacity by 2030: SEO Srivastava


India’s automotive industry is experiencing rapid change in consumer vehicle preferences and the introduction of new emission and safety standards. Entry-level sport utility vehicles (SUVs), which accounted for only about 3% of total sales in 2014 and 2015, have now become the largest segment, replacing the hatchbacks that used to dominate the sales charts. The country’s largest automaker, Maruti Suzuki, has been a late entrant in the SUV and electric vehicle (EV) segments. Speak with DHs Gyanendra KeshriMaruti Suzuki India Senior Executive Officer Shashank Srivastava explains the company’s expansion plan and the changing dynamics in the automotive sector. excerpts

What is Maruti Suzuki’s expansion plan?

Last year, the industry’s total domestic passenger car sales were 38.90 lakhs, of which Maruti Suzuki accounted for 16.44 lakhs. In 2030, the overall size of the industry in India is forecast to increase from 38.90 lakhs to around 60 lakhs and Maruti Suzuki will grow from 16.44 lakhs to 30 lakhs. Our market share was 42% in 2022-23 and the goal is to increase it to 50% by 2030. In addition, we carry out exports and OEM deliveries to Toyota. Recent fiscal exports and OEMs combined totaled 3.25 lakhs. Our goal is to increase the number to 10 lakh units by 2030. A total of 40 lakh vehicles would need to be produced by 2030.

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Our current capacity is just over 20 lakh units if we add the Manesar, Gurugram and Gujarat plants together. The gap of 10 lakh units will be filled by the Kharkhoda (Haryana) power plant, for which construction work is already underway. In order to fill the remaining gap of 10 lakh units, the board has asked management to consider the construction of a new plant and to provide a detailed report on where this plant will be located, what models will be produced, what the logistics will be etc.

Can you explain to us in more detail the investments planned for the capacity expansion?

The investment in the Kharkhoda plant is about 18,000 crore rupees. The Board has approved the construction of an additional facility with a capacity of 10 lakh units. We cannot comment on the investments for the planned new facility as the study has not yet been carried out.

Maruti Suzuki was a late starter in the SUV segment. What is the company’s strategy and goal in this segment?

If you look at the full year 2022-23, our market share in the SUV segment was 12.1%. Looking at the quarter, our market share in the SUV segment was around 8% in the first quarter of 2022-23, while it increased to 17% in the fourth quarter. The reason for this was that we launched the Grand Vitara in September 2022, after which our market share started to increase. The availability of Brezza has also been improved. For 2023-24, we are aiming for a 25% market share in the SUV segment. This will make us the number one SUV manufacturer. This is the challenge we have accepted.

Why are small hatchbacks selling sluggishly?

The hatchback segment of small cars grew by 20% last year. From about 11.60 lakh units in 2021-22, it will rise to 13.40 lakh units in 2022-23. However, if you compare it to the peak volume of 2017-18 when it was 15.58 lakh units, it is down significantly. This is mainly due to affordability. The prices in this segment increased very much compared to the income growth in this segment. The income of consumers in this segment did not increase in step with the price increase. Therefore, the affordability of cars in this segment has fallen.

Why have prices in the entry-level segment soared?

There are four reasons for this. First, regulatory requirements on emissions and safety. Second, the prices of physical commodities have increased. Third, government taxes have increased in the form of registration and vehicle taxes. And fourth, there are some additional features to the small cars like infotainment system etc. The price elasticity of people in this segment is very high. If you increase the price of a 50 lakh rupee Mercedes car to 52 lakh rupees it will not make a big difference to the customer, but if you convert a 4 lakh rupee vehicle to 6 lakh rupees it will make a big difference.

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