In the last three decades, Maruti has never faced as much competition as it does now. In a country where every second car sold wears a Maruti badge, the company is resorting to several measures to retain its No1 spot and market share. Company officials say that the royalty percentage contribution to its principal Suzuki Motor Corporation has moved up from 86 per cent in 2009 to 96 per cent in 2010. MSIL in which Suzuki holds over 54 per cent stake saw a doubling of its net profit at Rs. 2,497.62 crore for the 2009-10 fiscal which was on the back of it crossing the one million mark at 1,018,365 units in 2009-10.
Maruti’s share in the rural market has risen by 16.5% in 2009-10 up from 9.5% the previous year. Scrappage schemes abroad have helped exports as well. For 2010-11, MSIl expects to meet industry expectations of 12-14% growth not helped by rising interest rates, withdrawal of stimulus package and rising fuel costs. In order to keep up with the demand, MSIl will ramp-up production in its Manesar plant by 2,50,000 units at a cost of Rs 5,800 crore.
Speaking on the need for fresh capacity to maintain growth, Shinzo Nakanishi, managing director and CEO, said, “We’re already stretched our 10 lakh installed capacity by one lakh in 2009-10. We will pull out all stops to extend it to 1.2 lakh in 2010-11 and will also try to advance the Manesar expansion by as much as possible.”
Separately, Mayank Pareek, executive officer (marketing & sales), said it is currently trying to reduce the waiting period of its best-selling models. “We have increased production of the Swift to more than 12,000 units a month so that the waiting period is down from 7-8 months earlier to about three months now. For Eeco, production capacity has been more than doubled.” Pareek also affirmed that capacity expansion by 250,000 units at Manesar was planned for early 2012, this could be advanced.
MSIL is under huge threat from newer vehicles in the hatchback segment and needs to do something special to retain customers. Let’s wait and watch.
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