New Delhi: Country’s largest carmaker Maruti Suzuki India Limited (MSIL) on Wednesday said it is looking to set up a new plant in order to add a fresh production capacity which can go up to 10 lakh units per year. This comes in addition to the new facility being set up at Kharkhoda in Sonipat, Haryana.
RC Bhargava, Chairman, Maruti Suzuki said, “By 2030, our export volumes could reach as much as three quarters of a million cars, which is equal to the present capacity of the entire Suzuki Gujarat plant. So looking at the market size for the next 8 years, even if we utilize the 1 million potential of the Kharkhoda plant, we will still need more vehicles to meet the domestic and export demand.”
“The new plant will be expanded in a phased manner depending on the market demand. The Kharkhoda plant is a work in progress so we will try to expediate it to the maximum extent possible, but simultaneously work will be carried out on the other site as well,” he said during the FY23 earnings call.
The company’s board in principle has approved the creation of this additional capacity. However, it is yet to finalize the specific location of the new plant and the amount of investment that will go into it. Maruti said it will be funded by internal accruals and investment is likely to be “slightly higher than the Kharkhoda plant as this will be coming later.”
The company has lined up a capex of close to INR 8,000 crore during the ongoing fiscal year, up from INR 6,300 crore during the last fiscal year.
The new site will be the carmaker’s fifth manufacturing facility following its two plants in Haryana- Manesar and Gurugram, upcoming plant in Kharkhoda and Suzuki’s plant in Gujarat which is under contract manufacturing agreement. Maruti Suzuki also has an R&D center in Rohtak. Additionally, it sources vehicles (Grand Vitara) from Toyota Kirloskar Motor (TKM) facility in Bidadi, Karnataka.
Maruti started work on its upcoming 800-acre plant in Kharkhoda last year. The facility has space to expand and will reach its peak production capacity of 10 lakh units in the next 8 years, requiring a total investment of INR 18,000 crore. In the first phase Maruti has invested INR 11,000 crore with a production capacity of 2.5 lakh units.
The first phase of the Kharkhoda plant is scheduled to commence from 2025, followed by the second phase in the later part of 2026. The plant is built for expansion to meet the demand in the domestic and exports market.
In May last year, ETAuto reported that the Kharkhoda plant will not cater to EV manufacturing.
EV battery localisation for Maruti Suzuki is in the hands of its parent company Suzuki Motor Corporation (SMC). “Our EV programme continues in Gujarat. EV batteries are heavy and transporting them can be costly, so the EV and the battery plant should be as close to each other as possible and Suzuki Japan is already working on this.”
New vehicle launches
As part of Suzuki’s ongoing collaboration with Toyota, Maruti will introduce a premium 7-seater strong hybrid vehicle in the market. To be launched by June-July this year, it is likely to be based on the Toyota Innova Hycross.
“We will be sourcing a vehicle from Toyota, which is a 3-row strong hybrid and top-of-the-line vehicle in terms of price. The volumes will not be very large but it will be a path breaker,” Bhargava said.
The automaker shared that Toyota Kirloskar currently has a 12-month order booking for this specific model in India.
Suzuki will also introduce 6 EV models by 2030. It has earlier shared that the first BEV in the domestic market will be the eVX unveiled at the Auto Expo. The company said it aims to achieve a powertrain ratio of 15% BEVs, 25% HEVs and 60% hybrids by the end of this decade.
“The EVs will be mostly in the SUV category, though we are slowly moving to other categories as well. We also continue to work with different technologies to see what is best suited to Indian conditions,” Bhargava said.
Based on the target date set by each government, the automaker aims to achieve carbon neutrality in Japan and Europe by 2050 and in India by 2070.
Entry level cars to remain flat
About 43% sales in the passenger vehicle industry now comes from SUV category.
The maker of Swift and WagonR said that the small car sales are expected to be flat this year, with no significant growth. “Outlook for small cars continues to be somewhat negative. The market is certainly stronger in the SUV segment. This is where the market is going, we will go the same way.”
In FY23, the company also stopped the production of the Alto 800.
Outlook
Maruti Suzuki recorded its highest-ever annual sales volume for FY23, selling a total (domestic + exports) of 1,966,164 vehicles during the year. This includes 1,706,831 units in the domestic market and highest-ever exports of 259,333 units. The annual turnover of the Company has surpassed INR one-lakh crore mark and cash reserves are slightly over INR 45,000 crore.
Its Board of Directors recommended the highest-ever dividend of INR 90 per share (face value of INR 5 per share) compared to INR 60 per share in FY 2021-22.
In FY23, the carmaker missed the two million units annual sales mark by 34,000 units. Due to a shortage of electronic components, the company missed production of about 170,000 units.
The passenger vehicle industry is expected to grow 5-6% year-on-year on a high base of FY23. However, Maruti is confident of crossing the 2-million sales mark and outpacing the industry growth in the ongoing fiscal year. Currently, it has an order backlog of 412,000 units.
For FY23, the carmaker posted a consolidated net profit of INR 8,211 crore against INR 3,879 crore in FY22. “The results of 2022-23 are far better than last year. We have been able to get here because the Government and the RBI have been able to manage the inflation in the economy in a manner which enabled India to perform much better than other countries,” said the company’s Chairman.
