Maruti Suzuki lines up lowest capital expenditure in five years for FY21

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26 Aug, 2025 12:21

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Hit by severe external market disturbances, Maruti Suzuki, India’s largest carmaker, has cut back on capital expenditure substantially for the current year as certain projects stand to get delayed.

The Delhi-based maker of Swift and Baleno will incur capital expenditure of Rs 2,700 crore, which is the lowest since 2015-16, when it is was Rs 2,400 crore. During FY20, Maruti Suzuki had lined up capex of Rs 4,500 crore but closed the year with a spend of Rs 3250 crore. It was not immediately known what the original capex plan was for FY21.

"We have our capex of Rs 2700 crore. We work for the long term, we cannot afford to not invest in capex related works. It is too early to give any guidance for the year," said R C Bhargava, Chairman, Maruti Suzuki India.

Maruti Suzuki on May 13 announced a 28 percent slide in net profit for the quarter ended March 31, to Rs 1,291 crore hit by lower sales volume, higher sales promotion expenses, partially offset by lower operating expenses. Sales dropped by 16 percent to 385,025 units.

Maruti is examining if there could be any delays in new product development including development of electric vehicles which its parent Suzuki is pursuing with Toyota.

"We are facing some challenges and discontinuities in design and development work. We will have to do some catch though we are not sure how that would be done. We will have to take stock if programs get affected," said Kenichi Ayukawa, Managing Director, MSIL.

The company declined to provide any guidance for the current year given the uncertainties over COVID-19 impact on retail demand. A cut in Goods and Service Tax (GST) has been a long standing demand of the auto sector and the hope has been rekindled given the demand fall.

"Car sales happen in big numbers if the GDP is down to 1-2 percent. The timing of the GST cut has to be considered by the government. As we stand today the production volumes in the next 1-2 months is going to be very low. At this point a GST cut won’t make any sense. It will become relevant when production increases to much higher levels," said Bhargava.

Given the scare to undertake public modes of travel post the lifting of the lockdown for fear of getting infected by COVID-19 several think tanks have predicted an increase in demand for smaller and affordable cars as private vehicles. The company has delivered 2,300 cars and taken bookings of 5,000 cars in the last few days.

"Too early to say that small cars will get preference from the customers. There are some indication that there may be a slight shift to smaller cars but that can’t be taken as a trend since only a small portion of our network is open," added Bhargava.

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