New Delhi: Maruti Suzuki India, the country’s top car maker, is confident of maintaining profits and growth despite increasing competition, including from Tata Motors’ Nano, the world’s cheapest car.
Chairman R.C. Bhargava also said Maruti, 54.2% owned by Japan’s Suzuki Motor Corp, had been well served by its conservative fiscal policies and prudent cash management through the auto sector downturn and would not abandon them as the market picked up.
“We are fully aware of the competition that is coming. But despite the competition we will maintain margins, profitability and growth. Don’t worry,” he told shareholders at the company’s annual general meeting on Wednesday.
Apart from the Nano, which hit the roads in July, Toyota, Ford, General Motors and Volkswagen are all set to launch small cars in India next year.
On Tuesday, Maruti said sales in August rose 42% from a year earlier, with exports rising 156%, sending its shares up as much as 8.7% to a record high.
At 1:33pm, on Wednesday, its shares were down 1.4% at Rs1,523.80, after rising to a record high of Rs1,571.95 earlier in the day. The main index was down 0.3%.
The company expected exports to nearly double to 130,000 cars in the fiscal year ending March 2010 form about 70,000 in 2008/09, Bhargava said, and rise further to 150,000 in 2010/11.
Its A-star hatchback has been a success, with more than 50,000 sold since exports started in January.
Management, including Suzuki Chairman Osamu Suzuki, was considering whether to expand production capacity, Bhargava said.
“Nothing has been decided so far... it will be known in a day or two,” he told reporters.
If Maruti were to expand capacity, a leading candidate would be its plant in northern Haryana state, which currently produces 300,000 cars and 200,000 diesel engines a year.
Suzuki is investing $310 million in a research and development unit in India that should be ready in about two years, and Bhargava said Suzuki wanted Maruti to be able to design and manufacture cars entirely on its own.