Mumbai: Maruti Suzuki, India’s top carmaker, approved on Saturday an investment of Rs1700 crore ($369 million) to produce an additional 250,000 cars annually, the company said.
Maruti, in which Japan’s Suzuki Motor Corp has a 54.2% stake, currently has a production capacity of 1 million units.
The capacity growth will happen at Manesar in northern India, where Maruti is already investing $215 million in expansion and upgrading by shifting some capacity from its ageing facility in nearby Gurgaon.
The additional capacity will begin commercial production by April 2012, the company said in a statement.
Imminent competition from other Japanese auto makers such as Toyota Motor Corp and Honda in the small car market in India has prompted Maruti to raise its capacity.
At the Delhi Auto Expo earlier this month, Maruti’s managing director said that the company would double capacity at its plant in Manesar to 600,000 units to cope with competition.
At the auto expo the company also launched a five-seater multi-purpose vehicle Eeco priced at Rs259,000, which it said would create a whole new segment in the country.
NET PROFIT SOARS
The compact car segment in India, Asia’s third biggest economy and one of the fastest growing auto markets in the world, constitutes close to 75% of the total car market.
US auto maker General Motors has already entered the segment with its attractively priced Chevrolet Beat, while Ford and Volkswagen will shortly be launching their own compact cars here.
Italy’s Fiat, which has an equal joint venture with India’s Tata Motors, is also planning to unveil an India-specific car by 2012.
Maruti, which sells, one of every two cars in India, reported on Saturday a quarterly net profit of Rs688 crore ($149.2 million), more than tripling from a year earlier and beating forecasts.
The company said the higher sales were in part due to the lower base effect of the same period a year, a boost in demand from the government’s stimulus packages and easier availability of credit.
Favourable commodity prices helped keep costs low during the earlier part of the quarter, although they have started to firm up in the last few weeks, it said.