First new Maruti unit to make 250,000 cars
Maruti Suzuki will take two-and-a-half to three years to set up its first unit in a new factory location in Haryana from the day it acquires the land, with a capacity to manufacture 250,000 cars per annum. The investment for the first unit would be to the tune of ~5,000-~7,000 crore.
The country’s largest car maker is planning to add a new unit (of 250,000 per annum) after every two years and is looking at a final capacity ranging from 750,000 per annum to 1 million at the end, depending on demand growth projections.
It hopes to complete the process of investment in an eight to ten year time frame. The new plant will primarily replace its Gurugram plant (which has a capacity of 600,000 cars per annum) and also cater to new demand in the future.
R C Bhargava, chairman of Maruti Suzuki, said: “The completion of the entire plant will take 8-10 years. The first unit itself will require two-andhalf to three years. Our aim is to set up four units totalling 1 million per annum, but that will depend on demand projections. The plan is to add a unit every two years.”
Bhargava said the investment will be in phases and the total amount could reach ~17,000-18,000 crore but the exact numbers of each phase are difficult to project so early. He added that the first unit will always take the maximum investment as it includes the cost of land and building the infrastructure.
The plan, he said, is not to close down the Gurugram plant in one go but reduce its capacity in phases, once additional capacity is built in the new plant. A complete closure of the factory could take as long as five years.
Bhargava also clarified that the investment will be undertaken by Maruti Suzuki and not through Suzuki’s 100 per cent subsidiary, Suzuki Motor Gujarat, which controls the Gujarat manufacturing plant with a capacity of 750,000 cars per annum.
“We will finance the plant through our cash reserves. The Gujarat plant already has invested in three units which was the initial plan.
There is no fresh investment planned there,” he said.
The chairman said the company had never taken a decision to manufacture all new models in Suzuki Gujarat, adding: “The investment that we are making is to replace the capacity in Maruti Suzuki’s Gurugram plant and plan for Maruti’s expansion.”
On Maruti’s sales for FY22 Bhargava said that, based on trends, July sales will be better than June’s. “But with Covid-19 playing out, we cannot make any firm projections for the year. After all, in FY21, the car market shrank by 18 per cent and Maruti shrank by 16 per cent.”
On the growing push for electric vehicles, he said they were still too expensive for most consumers to adopt.
“The market for electric vehicles is very small and might take more than five years to take off. At the moment, how many of our consumers who buy our ~4 lakh entry model will be willing to buy the same in electric for ~10 lakh? How will a consumer who barely pays the initial payment in a ~4 lakh car now afford to pay for an electric vehicle?” asked Bhargava.
However, he added that it was a given that Maruti would come out with some electric vehicles at some point.
“The completion of the entire plant will take 8-10 years. The first unit itself will require two-andhalf to three years. Our aim is to set up four units totalling 1 million per annum, but that will depend on demand projections. The plan is to add a unit every two years” R C BHARGAVA,
Chairman, Maruti Suzuki