Brokerage firm Goldman Sachs predicts that Maruti Vitara Brezza production is up for a steep ramp up as the company is looking to maximize its margins by pushing the sales of newer models. The firm also says that Maruti Suzuki has reduced the production of Swift and Dzire twins in favour of the Baleno to reduce discount pressure.
Similarly, the new in-demand Vitara Brezza crossover would be favoured over legacy models in the coming months to improve the margin. Since these products are new, they command a premium and are offered without discounts. So, though the Swift twins are in demand, focusing production capacity on the more premium new models would help Maruti maximize its profit margin for the same total sales volume.
Given that the waiting period for the Brezza has extended to several months in most top cities, Maruti has to go for a production ramp up at the earliest to preserve the customer interest in the product. Since its existing facilities at Manesar and Gurgaon are running nearly at full capacity, Brezza’s ramp would have to come at a cost of an existing model’s production.
Maruti is waiting for the Suzuki-owned Gujarat plant to come on stream so that it can put its production constraints behind and focus on maximizing sales volumes.
Via – Moneycontrol.com