Maruti Suzuki India Chairman RC Bhargava revealed on August 7 'Maruti 3.0', a strategic endeavor focused on expanding its production capacity by an extra 20 lakh units over a span of nine years. According to him, this expansion plan also includes the release of about 28 different models by the end of the fiscal year 2031.
In his address to the company's shareholders in the Annual Report for 2022–2023, he said that the company is currently revamping its manufacturing facilities to "conform to the realities and what we are projecting for the future" in light of the growing popularity of SUV sales in India.
Bhargava added that although the Indian automobile sector is not anticipated "to grow in double digits, like what happened in China in the past, we do expect that a 6 percent growth rate will be maintained till FY 2030-31".
Emphasising on the steps taken to fulfil anticipated demand, he said, “Our first phase was when we were a public enterprise. The second phase ended with the COVID-19 pandemic, and the Indian car market became the third largest in the world… It took us 40 years to create a capacity of 2 million units and Suzuki Motor Corporation helped in this process by establishing the Gujarat facility. Your Company now has to add the next 2 million in a period of 9 years.”
By the fiscal year 2030–31, Maruti Suzuki projects export volumes of between 7.5 lakh and 8 lakh cars. The Chairman emphasised that the company has to increase its manufacturing capacity by an extra 20 lakh units due to the mix of home and foreign demand.
Bhargava said, “Our exports rose to 259,000 units last year. We expect the demand for exports to continue to grow and export volumes are projected at 750,000-800,000 cars by FY 2030-31.”
The task of managing the production of 40 lakh units annually, Bhargava added, may necessitate restructuring. He said, "Requires considerable thought and possible reorganisation of the structure of the company keeping in view the best interests of all shareholders as well as other stakeholders of the company. We will, as soon as possible, announce what we are proposing".
He, however, said the challenge is not only to produce 40 lakh cars a year and possibly higher volumes in the subsequent years but the company also has to sell this number of cars.
"By FY 2030-31, your company could have about 28 different models. Clearly the organisation and systems for selling such a large variety of cars will require changes from what exists at present," he said.
At present the company has 18 models sold in the market.
"Since there are no prospects of demand for the smaller entry level car market recovering to the growth rates of the past, we are restructuring our production facilities to conform to the realities and what we are projecting for the future," Bhargava said.
He added that hatchbacks and small cars will still play a significant role in the company's overall portfolio despite the slump in this market.
"The rate of growth of these cars is expected to be less than 2 percent a year but the industry volume is almost a million cars a year with MSIL having a share of about 70 percent," he said, adding the company intends to do whatever is necessary to meet customer needs in this segment in the best possible manner.
Maruti Suzuki has "four very well-accepted SUVs in the market and are on our way to assume leadership in this segment. We will gradually keep increasing our market share that had declined in the last 2-3 years", Bhargava said.
On the growth prospects of the Indian car market, he said, "While we do not expect the car industry to grow in double digits, like what happened in China in the past, we do expect that a 6 percent growth rate will be maintained till FY 2030-31." In FY 2023-24, Bhargava said, Maruti Suzuki "expects to grow at a slightly higher rate. Along with the rising domestic demand, the prospects for exports are also expected to continue to improve. Our exports rose to 2,59,000 units last year." He informed the shareholders that the development of electric vehicles is proceeding well at the Gujarat facility and the company expects to start the sale of the first model in 2024-25.
"By 2030-31 we expect to have six EV models. These models are expected to comprise 15-20 percent of our total sales by that time," Bhargava added.
He emphasised the benefits of using CNG, ethanol, compressed biogas, and hybrid technologies in cars, saying it "will all lead us faster to our goal of reducing the carbon footprint than relying only on any one technology".
Bhargava claimed that though less severely, shortages of semiconductors still had an impact on manufacturing.
"I expect that during the current year, there will be further improvements, though normalcy in supplies will still not be achieved," he said.
(With PTI inputs)
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