Maruti’s Gurgaon plant has been operational since 39 years
Maruti having decided to shift out of the Gurgaon plant, has been offered three land parcels by the Haryana govt. Land has been offered at Manesar, Sohna, and Kharkhoda in Sonipat. The latter has plenty of land available. While recce is ongoing, Maruti will move to a plant in Haryana itself.
New and bigger Maruti plant in the pipeline
Maruti already operates a plant at Manesar, which is twice the size of the Gurgaon plant. Manesar has over time developed as a renowned auto hub with a robust network of auto ancillaries. Previously the state government had offered 1,300 acres land at IMT Sohna; but a soil test at site found high water levels, rendering the lot unsuitable for car manufacturing plant.
The 39 year old Manesar plant occupies 300 acres, and has an annual production capacity of about 7 lakh units. In the last ten years or so, Gurgaon has grown to epic proportions, and currently houses many a corporate office. With incremental job growth, and the sheer number of folks that have moved into Gurgaon, the megapolis has ceased to be ideal for Maruti’s functionality.
Expansion of residential hubs, and residential traffic, fuelled with congestion owing to movement of heavy vehicles creates bottlenecks. Apart from location inconvenience, a bigger plant would help Maruti increase production as per projected demand. Direct employment generated from Gurgaon plant accounts for 15k personnel, and much more, indirectly.
Plant expansion talks have been ongoing for over a year as Maruti is intent on a new site that spans 700 – 1000 acres. The three options presented are currently under evaluation.
Maruti Suzuki in FY21
When Covid-19 lockdown was announced in March end, production everywhere ceased. MSIL was able to resume production at the Gurgaon facility after 55 days of complete closure. This is where Ignis, Vitara Brezza, S-Cross, and Super Carry LCV are manufactured. With sales resuming in May 2020, production at the Gurgaon plant was started on May 18, 2020.
Production increase is an integral part of MSIL’s longterm plans, and as early as 2017 the company announced future sales projections of 2 million for 2020, and 2.5 million by 2022-23. MSIl ended FY20 at 14,36,124 units sold, down 17 percent from 17,29,826 units sold in FY19. With Q1 FY21 sales ranging from 0 to whatever possible, the year has gotten off to a weak start.
Sales has shown an uptick in July 2020, and it remains to be seen if current momentum will hold steadfast through the festive season. Either way, sales projections for FY21 would need to be revised on account of Q1 slowdown, and expected pandemic related slowdown.
MSIL does have an advantage when it coms to selling cars having established strong presence in the small car segment. This could help the brand garner sales in a market that doesn’t feel too dynamic now.