With car market set to triple by 2030, Maruti MD calls for auto hubs across India

The Brezza became the first compact SUV from Maruti and quickly became the largest-selling SUV in the country. The Brezza is priced at 7.34 lakh and is sold with just a petrol engine with three broad variants. With the changeover to BS-VI Maruti discontinued the diesel variant. (Image: Maruti Suzuki)

With India being one of the world’s fastest-growing automobile market, its largest carmaker Maruti Suzuki’s chief says the industry should create manufacturing hubs across the country if it has to work at scale.

Speaking at the 58^th annual session of the Automotive Component Manufacturers Association (ACMA), Maruti Suzuki MD Kenichi Ayukawa said that the industry, including auto component manufacturers, should invest in new technologies and spread out manufacturing across the country.

India clocked sales of 3.28 million in fiscal year 2018, a growth of 8 percent over the previous fiscal. In the first quarter of the current fiscal, sales increased by 13.3 percent.

“Growing at a compounded annualised growth rate of 8-9 percent, we expect the passenger vehicle industry alone to be about 10 million units per annum by 2030,” Ayukawa said.

“The scale of operations before us will increase nearly three times of the present levels. Clearly, we have to triple our efforts to meet the growth in volumes. Our businesses will therefore, need to be re-looked and aligned to new scale of operations,” he added.

He said “multi-location plants” would become a necessity in order to grow and de-risk the business.

“Historically, original equipment manufacturers (OEMs) and component manufacturers have had a cluster approach towards developing greenfield projects,” said Ayukawa.

“Gurgaon is a shining example. Many such auto-clusters have to be developed throughout the country. This will help us sustain the next phase of growth and insulate us from unforeseen business risks. I urge component manufacturers to gear up for multi-locations facilities and align investments accordingly,” the Maruti chief added.

Maruti itself has faced the brunt of having its manufacturing capabilities in a single location. In mid-2012, a worker unrest at its Manesar, Haryana, plant spilled over into a full-blown riot that caused the death of an HR manager and brought production to a standstill for over a month.

The disruption in the supply chain caused Maruti's market share to fall to a low of about 37 percent.

In 2017, Maruti announced it would set up its first unit outside Haryana, a plant in Sanand, Gujarat. It is continuing to scout for locations across the country to set up new facilities.

Maharashtra, Tamil Nadu and Haryana remain the top destinations to host automotive manufacturing and component manufacturing plants.

But along with Gujarat, the country has seen Andhra Pradesh emerge as one of the more promising destinations for automotive investments, with companies like Hero MotoCorp, Kia Motors and Isuzu setting up plants.