New Delhi: The country’s largest car manufacturer, Maruti Suzuki India Ltd, rolled out its millionth car this fiscal year on Tuesday, and announced plans to ramp up capacity and invest more in research to maintain its lead in India’s increasingly competitive car market.
Milestone: Heavy industries minister Vilasrao Deshmukh, Haryana chief minister Bhupinder Singh Hooda, Osamu Suzuki and Maruti Suzuki chairman R.C. Bhargava during the roll-out of the millionth car. Manvender Vashist / PTI
The company, which sells one of every two cars sold in the country, has so far produced 8.8 million cars at its facilities in Gurgaon and Manesar, both in Haryana.
It will now invest 33 billion yen (Rs1,665 crore) to increase capacity to 1.25 million units a year by 2012, said Osamu Suzuki, chairman, Suzuki Motor Corp., which owns a majority stake in Maruti.
He was speaking at an event marking the roll out of its millionth car for the year ending 31 March.
The expansion will take place at Manesar, where the company plans to add a new assembly line.
Car sales are booming in India, increasing 24% in February to 153,845 units. Maruti has been struggling to meet domestic demand and its export commitments, despite producing 97,829 units in February, an increase of 25.4%.
The firm is also feeling the heat from intensifying competition. The previous three months have seen rivals Volkswagen AG, Ford Motor Co. and General Motors Corp. launch small cars for Indian buyers.
“Pressure is on Maruti Suzuki to defend its control over India’s passenger car market,” Ammar Master, senior market analyst at JD Power and Associates, wrote in a report.
“We expect Maruti Suzuki to lose its passenger car share from 52% last year to 45% in 2010 on sales of 707,000 units,” he said.
Suzuki conceded he expects the competition to get tougher. “Today we’re celebrating the success of one million (cars), but taking it to two million is going to be a tough journey,” he said.
Maruti is also investing heavily in research and development and expanding its engine capacity. Last year, it inaugurated a research and development facility at Rohtak, also in Haryana, at an investment of around Rs1,500 crore to develop its first made-in-India car. The facility is expected to allow Maruti to refresh models faster.
The firm’s petrol engine plant is being expanded at about Rs1,000 crore to produce 700,000 units a year, up from 500,000 units.