NEW DELHI, Aug 7: Country’s largest carmaker Maruti Suzuki India will have a “high number of new model launches” in this fiscal, including a compact sport utility vehicle, as it looks to consolidate its leadership position.
The company, which will have a new manufacturing plant in Gujarat where its parent Suzuki Motor Corp will invest, said Centre alone cannot realise the dream of the country becoming a global manufacturing hub and states would have to play an important role.
“2015-16 will see a high number of new model launches. Suzuki Japan and our engineers here have been jointly working on new model development, and the results are before all to see,” Maruti Suzuki India (MSI) Chairman R C Bhargava said in his address to shareholders in the company’s Annual Report for 2014-15.
The company has already launched its premium crossover model S-Cross this week, while a new premium compact car is also around this festive season.
“Sometime in the future, we will launch a Compact SUV which will raise our presence in the UV segment by a quantum leap,” MSI Managing Director and CEO Kenichi Ayukawa said.
Although the details of the compact SUV hasn’t been shared, the company said: “Soon, we will also introduce the Compact SUV, the concept of which was presented as XA-Alpha. This will help us cater to an emerging class of customers who prefer SUV appeal while staying compact.”
Bhargava said, in 2014-15, after three years of stagnation, the company “grew 11.1 per cent (in sales), even though the rest of the passenger vehicle industry actually declined 1.3 per cent”.
“Our market share, at the end of the financial year was 45 per cent and we have so far further improved this to 46.8 per cent. This has been achieved due to successful new model launches, and the efforts by all our employees in production, sales and service, supply chain, engineering, quality and other functions,” he added.
For 2014-15 fiscal, the company had posted its highest ever annual sales at 12,92,415 units, up 11.9 per cent, from 11,55,041 units in 2013-14. The previous high was in 2010-11, when the company had sold 12,71,005 units.
The company’s domestic sales during the last fiscal stood at 11,70,702 units, up 11.1 per cent, from 10,53,689 units in 2013-14 fiscal.
On the Make in India campaign, Bhargava said: “The task of making India a globally competitive manufacturing hub cannot be completed in a short time or by the central government alone and states also need to play a major role.”
He said Prime Minister Narendra Modi has given priority to manufacturing in his development strategy and many changes have been made in rules and regulations so as to make it easier to do business.
“Many changes and improvements have to be made. The states have to play a major role in many areas, so that manufacturing can become competitive.
All of us, as citizens and voters, entrepreneurs and managers, have to understand what is required to make manufacturing in India globally competitive, and nudge political parties and governments in this direction,” Bhargava said.
Expressing concern over recalls due to quality issues of automobile parts, Bhargava said: “While we introduce new models, an area of concern, not only for Maruti Suzuki, but for the entire industry, is the need for improvement in the quality of components.
“There have been several recalls in the industry, and most of them originate from the components supplied by small manufacturers.”
The government is legislating to deal with recalls, but it is perhaps even more important to review the supply chain arrangement to correct the identified weaknesses and reduce recalls, he added.
Commenting on the progress by MSI to enhance R&D, Bhargava said: “Our Rohtak R&D facility will be completed by the time we meet next year. This will be a major step forward for the company, and will help new model development.”
Various new regulations are also likely to be introduced regarding safety and environment and the facility will greatly help in testing and validating products to meet them, he added.
On the company’s preparations to enter the light commercial vehicles segment, Ayukawa said MSI was looking at a new sales network as it did for premium products like the S-Cross through Nexa.
“On similar lines, we will work on a channel for commercial vehicle sales,” he said, adding by the close of the current financial year, more than 100 NEXA showrooms would be opened in more than 30 Indian cities.
Ayukawa said the company would also focus more on exports than it had done in the past.
“In particular, we have to develop the Africa and Middle-East markets. We will have to plan for launching global products to serve the advanced markets and expanding our network in the emerging markets as long term measures in building export strength,” he said.
Commenting on the company’s manufacturing capacity, Bhargava said the two plants in Gurgaon and Manesar will be fully utilised next year and the company needed new capacity.
The two plants have a combined annual capacity of 15.5 lakh units. The Gujarat plant will have a total capacity of 7.5 lakh units annually when fully completed.
He said the Gujarat plant is expected to start production in 2017. MSI will have a contract manufacturing arrangement with parent Suzuki.
“As I had mentioned last year, Suzuki Japan is fully financing the investment in Gujarat, but all the production there will be sold to Maruti at cost, and we will earn the same profit by selling these cars as we would have, if we ourselves had invested in Gujarat,” he added.
On seeking minority shareholders nod for the same, Bhargava said: “The timetable for the minority shareholders voting on this arrangement will be announced as soon as certain procedural formalities are completed.” (PTI)
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