The carmakers are already feeling the heat of hike in petrol prices and interest rates, as sales numbers have fallen steeply.
The carmakers are already feeling the heat of hike in petrol prices and interest rates, as sales numbers have fallen steeply.
And if this was not enough for companies like Maruti Suzuki and Hyundai Motors to hold their expansion plans, the fear of Union finance minister announcing duty hikes on diesel cars, is already hurting the prospect of them setting shop in Gujarat.
It has been more than three months since Maruti Suzuki started talking about its new manufacturing plant in Gujarat. With an investment plan of Rs18,000 crore including investment from ancillary companies, Maruti Suzuki has been looking for piece of land in Mehsana district of state.
But company sources said company will take a call on the plant only after central government's budget session in March on when to break ground for a new manufacturing facility. Maruti Suzuki is already in talks to buy two 500-acre tracts of land in Gujarat but is worried that slowing economic growth will crimp demand for cars.
Maruti Suzuki plans to build three plants in phases at a cost of Rs18,000 crore that would increase production by around 2,700 vehicles per day.
The source said that company will probably do that after making an assessment of the economic scenario post-budget and will consider as to how the car market is likely to grow.
Similarly, Hyundai Motors which is also considering Gujarat as one of the location to set up its next plant is also waiting for union budget. Sources in Hyundai said that company is looking at an increase in supply of the diesel variant, especially i20 and Verna. "We do have a plan for diesel plant. But we are not sure as it will all depend on central government's policies and support for diesel technology," said the source.
During a visit to Ahmedabad recently, Kim Joong-Keun, ambassador of South Korea, had said that the Korean carmaker, Hyundai, can surely come to Gujarat. At that time, he said that Hyundai is currently manufacturing 6 lakh cars per annum. The company's current production capacity is being utilised fully but, in a couple of years, Hyundai may need to expand its capacity.
Korean companies already have a strong presence in Chennai and Delhi and their next location can be Gujarat also, he said.
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