Maruti Suzuki aims for 20 lakh more units, 28 new models by 2031

Maruti Suzuki India has introduced 'Maruti 3.0,' a strategic initiative aimed at augmenting its production capacity by an additional 20 lakh units within a span of nine years, accompanied by the introduction of approximately 28 diverse models into the market by the fiscal year 2030-31, as conveyed by the company's Chairman, R C Bhargava.

Given the escalating traction of SUV sales in India and the limited prospects for the revival of demand in the compact car segment, a domain in which Maruti has traditionally excelled, the company is reshaping its production facilities to align with the current trends and projected future scenarios. This information was shared by Bhargava in his address to the shareholders through the Annual Report for the year 2022-23.

Bhargava emphasisedṣ that while the Indian automobile industry might not replicate the double-digit growth rates observed in China historically, a steady growth rate of 6 per cent is anticipated to be sustained until the fiscal year 2030-31.

We must augment our capacity by additional 2 million: Chairman, Maruti Suzuki

He highlighted the strategic moves undertaken by Maruti to meet forthcoming demand, labelling the upcoming strategies as 'Maruti 3.0.' He elucidated, "Our initial phase was characterised by our existence as a publicly-held entity. The second phase concluded with the onset of the Covid-19 pandemic, coinciding with the Indian automotive market ascending to become the world's third-largest. The challenges ahead are unparalleled."

Furthermore, Bhargava articulated, "In the span of 40 years, we managed to establish a production capacity of 2 million units, with the support of Suzuki Motor Corporation (SMC), which established the Gujarat facility. Presently, your company must augment its capacity by an additional 2 million units within a mere 9 years."

The Chairman also alluded to the possibility of structural reorganisation, stating that the complex task of managing the production of 40 lakh units annually necessitates thoughtful consideration and potential restructuring of the company's organisational structure. He assured that the company will promptly unveil their proposed plans.

Maruti Suzuki foresees continuous growth in export demand, estimating export volumes to range between 7.5 lakh to 8 lakh cars by the fiscal year 2030-31. This, in conjunction with domestic demand, underscores the need for the company to expand its manufacturing capacity by an additional 20 lakh units.

More facilities to be added

Elaborating on the expansion plans, Bhargava revealed, "Progress is underway at our initial site in Kharkhoda, Haryana, with the first plant of 250,000 unit capacity projected to commence operations in the first half of 2025. Subsequently, one similar facility will be added annually, leading to an aggregate capacity of one million. Simultaneously, we are in the process of identifying a second location to accommodate another one million capacity by the fiscal year 2030-31."

However, Bhargava acknowledged that the challenge isn't solely limited to production; it extends to the sale of these considerable numbers of vehicles. He projected that by the fiscal year 2030-31, Maruti might offer around 28 distinct models, necessitating changes in the organisation and sales systems to accommodate such a diverse portfolio. Currently, the company boasts 18 models in the market.

While the demand for smaller entry-level cars is waning, Bhargava affirmed that hatchbacks and compact cars will remain integral to Maruti Suzuki's product lineup. Despite an estimated growth rate of less than 2 per cent per annum for these segments, the company will continue to focus on meeting customer requirements effectively.

In terms of SUVs, Bhargava stated, "Maruti Suzuki already boasts four highly successful SUVs in the market and is steadily advancing towards a leadership position within this segment. We are on a trajectory to regain the market share that declined over the past 2-3 years."

Regarding the growth prospects of the Indian car market, Bhargava posited, "While we don't anticipate the Indian car industry to achieve double-digit growth rates akin to China's past, we do foresee a sustained growth rate of 6 per cent until the fiscal year 2030-31."

EVs to account for 15-20 per cent of total sales

For the fiscal year 2023-24, he projected a slightly higher growth rate, with an optimistic outlook on domestic demand and export opportunities. Bhargava also informed the shareholders about the progress of electric vehicle development at Maruti Suzuki's Gujarat facility, with the anticipation of launching the first EV model in the fiscal year 2024-25.

"By the fiscal year 2030-31, we are envisioning the presence of six EV models, accounting for 15-20 per cent of our total sales volume. Given India's context, achieving carbon neutrality in the transportation sector would involve a blend of suitable technologies aligned with the nation's resources and economic conditions."

In terms of eco-friendly technology, Bhargava stressed the significance of hybrid systems, ethanol, compressed biogas, and CNG, asserting that a combination of these approaches would hasten the reduction of carbon emissions more effectively than relying solely on a single technology.

Despite achieving record turnovers and profits in the past fiscal year, Bhargava acknowledged the ongoing impact of semiconductor shortages on production, though he anticipates incremental improvements in the current year, without a complete restoration of normal supply conditions.

(With PTI inputs)