Maruti Suzuki currently has an installed annual production capacity of 1.5 million units between its Manesar and Gurgaon facilities but with a domestic sales target of 2 million units per annum by 2020 along with growing export operations mean the country’s largest passenger car maker is looking at a looming capacity crunch.
In the company’s annual report, Chairman R C Bhargava said that capacity utilization of all of its existing plants will reach 100% next year and additional capacity is needed. Foundation for the new Gujarat plant has been laid already but production is set to commence only in 2017, that too only if the minority share holders vote in favor of the new business model without any delays.
Maruti’s impending production capacity crunch could hurt the prospects of new models such as Baleno (YRA) premium hatchback
As per the new business model, the Gujarat plant is fully funded by parent company Suzuki which owns 56% of Maruti Suzuki India Ltd. The cars manufactured at this plant will be sold at cost price to MSIL which then takes care of marketing, sales and service. Minority share holders of MSIL are not very happy with this move as they think this will reduce the company to a mere marketing and sales firm in the long run. However, Mr. Bhargava is confident that share holders will appreciate the benefits of such an arrangement and vote favorably without causing stagnation in operations.
It’s high time for Maruti Suzuki to get the new plant up and running at the earliest as it is gearing up to launch updated versions of existing models and introduce all-new products such as a sub-4m crossover codenamed YBA and Baleno (YRA) premium hatchback in the coming months.
Via – Business-Standard.com