Maruti may assemble cars offshore soon

Maruti may assemble cars offshore soon

New Delhi: Maruti Suzuki India could well be assembling cars in some neighbouring countries soon. Chairman RC Bhargava said today that in case export volumes to any country justified putting up a vehicle assembly plant, Maruti would consider doing this on its own and not through parent Suzuki Motor Company (SMC). Till now, SMC has set up assembly operations outside Japan but Maruti has been manufacturing only in India.

AP.

As of now, Maruti’s biggest export market is Algeria with about 40,000 units annually. Besides, the company has also begun supplying completely knocked down (CKD) kits to Indonesia, another 40,000 units, annually. In Thailand, Maruti again plans to begin supplying components for the Swift hatchback, at the request of the Thai Government.

To start assembly operations, any of these three countries could be  considered. However, Chief Operating Officer (Marketing and Sales) Mayank Pareek declined to name any.

Maruti’s exports to Sri Lanka have fallen by half this year since the country has raised duties significantly but Pareek said exports have not been halted and some cars are still being sent there.

He pointed out that Europe has seen a steep decline as an export market, prompting Maruti to look for markets elsewhere. Exports to Europe last year were 43,000 units of which 30,000 were supplied to SMC dealers and the remaining cars went to OEMs. But this year, till now, exports have been down to only 27,000 units in all.

Pareek said last year the company exported 1.27 lakh vehicles in all but this year, it is struggling to meet last year’s target because of the European debacle. In such a scenario, setting up vehicle assembly plants in those markets where demand remains robust makes sense.

Maruti may have seen moderate success in the overseas market but the scene in domestic market remains dismal. The passenger car industry could go into negative territory this month and Maruti may just scrape by. The overall market for petrol vehicles has declined by about 16 percent this year while that for diesel cars have risen by almost 40 percent.

But Maruti’s share of the rising diesel market remains at just 22 percent even though its petrol market share is a robust 58 percent. This means it has a lot of catching up to do in diesel car sales. Now that sales of even diesel cars have begun to decline, the industry and Maruti could face tougher days ahead.

The company has set itself a sales growth target of just six percent this fiscal, in line with the market, and if things remain same in the next 12 months, it may not see a double digit growth even in 2013-14.

The only silver lining for Maruti appear to be the new Alto 800, the Ertiga and Swift diesel. The company claims 42,000 retail sales of the Alto 800 from its launch till yesterday and 15,000 back orders; 18,000 Ertiga customers are waiting for deliveries and 46,000 Swifts are yet to be delivered.

So unless the overall economic environment improves significantly in the next few months, Maruti’s domestic sales performance would not be much to write home about.