Apart from ICE-based units, Maruti’s new plant could also be used for manufacturing the company’s upcoming electric cars
With robust sales and potential increase in demand in coming years, it has become imperative for India’s largest carmaker to boost production capacity. In FY 21-22, Maruti sold a total of 1,652,653 vehicles, which is YoY growth of 13.4%. Domestic sales were at 1,414,277 units, a jump of 3.9% in comparison to FY 2020-21.
Maruti Suzuki new plant
Maruti has been looking for an appropriate location to set up its new plant for quite some time now. The company had been discussing the possibilities with the Government of Haryana to take this project forward. In a positive development, Maruti recently completed the process of acquiring land for the proposed plant. This is a significant step forward, as land acquisition is often quite challenging.
The land allotted is situated at IMT Kharkhoda in District Sonipat. It is an 800 acre site, with rights originally held by HSIIDC (Haryana State Industrial and Infrastructure Development Corporation Limited). The site will be developed in phases, with the first plant scheduled to become operational by 2025.
Initial phase of the project will entail investments of more than Rs 11,000 crore. The first plant will have capabilities to produce 2.5 lakh units per year. Maruti has strategically chosen a large site to provide for future requirements. In case there’s a need to increase capacity, more plants can be built at the same site. This is a lot easier, as compared to searching for a new production site all over again.
Maruti total production capacity
Maruti currently operates two state-of-the-art manufacturing facilities, one in Gurugram and another in Manesar, Haryana. Location of the new plant site is advantageous, as it is within 100 km from the existing plants.
This meets the requirements of Maruti’s current policies that seek to prioritize local procurement. It helps improve efficiency and reduce logistical challenges. Around 82% of Maruti’s primary suppliers are located within a 100 km radius.
As of now, the two Maruti plants have combined production capacity of 1.5 million units per annum. There’s another plant in Gujarat, which is owned by Suzuki Motor Gujarat Private Limited (SMG), a subsidiary of Suzuki Motor Corporation (SMC).
This plant was setup to meet the increased demand for Maruti cars. The Gujarat plant currently has production capacity of 750,000 units per annum. Taking all three together, total production capacity is at 2.25 million units per annum.
With the new plant, Maruti will also be looking to reduce waiting period. As of April 2022, Maruti had a backlog of 3.25 lakh cars waiting delivery. Among these, CNG car orders were at 1,29,000 units. That’s over 40% of the total Maruti cars waiting to be delivered. There has been increased demand for CNG cars due to rising fuel prices. This trend will continue, as fuel prices are unlikely to come down anytime soon.