Maruti Suzuki plans one-million-unit plant to drive home a larger market pie

Maruti Suzuki chairman RC Bhargava

Maruti Suzuki plans to set up a plant with a capacity to roll out one million units a year to address an increasing demand for its vehicles as well as to firm up its position in the Indian automobile market, said Chairman RC Bhargava in an interview with CNBC TV-18.

The board of India's leading carmaker has approved the plan to set up an additional capacity but the company is yet to decide how it will be phased out in terms of setting up of a whole new unit, exploring locations and looking for land for the facility.

Bhargava also mentioned that the auto major faced several challenges last year, including a chip shortage that led to a production loss of 170,000 units in FY23. He expects production loss in Y24 due to chip shortage to be lower this year.

Despite this, he expects growth in the entry-level segment to be flat in FY24 due to affordability issues.

Maruti Suzuki announced its earnings for the quarter ended March 2023 on April 26. The company reported a 43 percent jump in standalone net profit at Rs 2,623 crore for the quarter ended March 2023. However, the profit figure was a tad below the Street estimate of Rs 2,773 crore.

On electric vehicles (EVs), Bhargava stated Maruti Suzuki cannot rely on only one technology to reach carbon neutrality. Despite the launch being several years away, the company has received a booking backlog of over four lakh units.

The chairman, however, remains concerned about the impact of removing subsidies for EVs. Bhargava pointed out that EV sales dropped significantly in China after subsidies were stopped, and warned that Indian EV players could also see a drop in volumes if similar subsidies were removed in India.