Maruti targets annual sales of 2.5 million units by 2025
NEW DELHI: Maruti Suzuki India Ltd, seller of every second car in India, has raised its sales target for the second time in two years to 2.5 million units every year by 2025, two people in the know of the matter said.
The company that set itself a target of 2 million sales by 2020 in 2015 will achieve that target one year ahead of the schedule, one of the people quoted above said.
In its meetings with the tier I suppliers, the company management has asked vendors such as PPAP Automotive, JBM Auto Ltd, Minda Industries, Lumax Auto Ltd and others to ramp up investments near Suzuki Motor Gujarat’s (SMG) manufacturing units in Gujarat. Some of the vendors have started to ramp up investments in the state to meet the capacity requirements.
SMG and Maruti have a contract manufacturing agreement wherein the latter buys products from the former’s factories at cost price.
“Maruti Suzuki has set a target of 2.5 million vehicles by 2025 and the component suppliers have been asked to ramp up their capacities in and around the Gujarat plant,” said the first person quoted in the story. Maruti sold 1.5 million units in 2016-17.
Significantly, for some of the tier one suppliers, business from Maruti translates into almost 40% of their top line. As a result they don’t have a choice but to follow the company’s guidance.
“Maruti Suzuki has set a target of selling 25 lakh vehicles by 2025 which is ambitious but given the product line up, and capacity it will have in Gujarat the target is achievable,” said the second person with direct knowledge of the development.
Maruti’s new sales target has come on the back of a changing passenger vehicle industry that is going through disruption of sorts amid changing rules on fronts such as emission and safety; and a global outcry to move to vehicles run on electricity to cut down dependence on fossil fuel and reduce pollution.
According to the second person quoted in the story, his company is making an investment of about ₹20 crore in its existing facility in Gujarat to expand production and the exercise is expected to be completed by 2019.
According to a company spokesperson, the second line at SMG’s factory will take the total production capacity of Suzuki in India to 2 million units. “Our suppliers are also aligned to our business goals and will make investments in ramping their capacities accordingly,” the spokesperson said in response to a Mint questionnaire.
“The third line ( Line C) will be added depending upon market situation and our suppliers will also align to it,” he added.