Maruti to add 1 lakh cars capacity

Maruti Suzuki India will soon increase its production capacity by at least one lakh vehicles.

The country’s largest car maker is targeting sales of about 9.5 lakh vehicles this fiscal, close to the current capacity of a million (10 lakh) units of its Gurgaon and Manesar facilities together.

The company was earlier targeting a 5% sales growth this fiscal, but has since revised its forecast to 10% for the domestic market. The export target has also been increased to 1.3-1.5 lakh units from 1.2 lakh units earlier.

Meanwhile, on account of capacity constraints, there is already a waiting period for some of its popular models such as the Swift Dzire, Ritz and Swift diesel.

Chairman R C Bhargava told DNA Money, “We are already working at full capacity. In July and August, we produced close to 86,000 vehicles each and going at this rate, we would be using the entire available capacity of a million units this fiscal… so we are looking to increase capacity at Manesar.”

Bhargava said they could add a production line at the existing site, but a final  decision would be taken only when the Suzuki Motor Company chairman Osamu Suzuki visits India next week.

Suzuki would be here to chair the annual general meeting of Maruti on September 3 and is expected to take the call on additional investment needed to create fresh capacity.

Though Bhargava declined to specify the investment needed for capex, he did indicate that economies of scale dictate any new production line should be making 1-1.2 lakh units.

Manesar’s current installed capacity is 3 lakh units. Going by industry sources, putting up capacity for 1 lakh units typically needs an investment of about Rs 1,500 crore. That could well be the investment Maruti will make at Manesar.

The proposed new line would take at least a year to be up and running. At present, the bulk of Maruti’s cars — the 800, Alto, WagonR, Estilo, Ritz, Versa and Gypsy — are being made at the Gurgaon facility. The relatively newer models —Swift, Swift Dzire, A-Star and SX4 — roll out of Manesar.

Then, Maruti is planning to augment its portfolio in the next few months with a ‘cost down’ Alto, a new MPV based on the Versa platform and facelifts of existing models. No wonder it is thinking of capacity expansion now, since this new capacity will take at least 12 months to come on stream.