In order to meet the demand for its range of cars, three of them have a long wait of six months, Maruti Suzuki has to shell out Rs6000 crore for expanding its plants. By this the company is likely to increase the production, said its executive officer. Swift, for which the wait period is longer than for other cars, is to be increased to 12000 units a month to reduce the waiting period considerably. The ratio of production in terms of Eeco is to be double than that of the current, he further added. Without increasing the shifts, to third one, the company is confident of delivering the required amount of vehicles – 1.2 million per year.
The increased production at Manesar – 250000 units- actually scheduled for 2012, is to be advanced. Gurgaon plant too would be relieved for delivering an additional 90000 units at an investment of rs140 crore. The competition is high in A2 and upper A2 segment and Maruti is to regain its supremacy in any segment. A tough time waits for the company with regard to the export volume due to the scrapping of scrappage incentive scheme in Europe. On parallel, the company is facing a fall in its margin – 170 basis points on every quarter period. This is chiefly due to the high increase in raw material costs, depreciation of the Euro and the mix adopted in the models.(Maruti to increase its production)
Taking all extremes with care, the company would think of revising the price at appropriate time. The company has to shell out royalty payment for the new arrivals. There is an increase of royalty oriented vehicles – 86% – in all its portfolio during the FY 10(which was 81% in the previous FY). Maruti is quite happy over its penetration into rural segment and government employees. In all the sale of cars in rural sector accounted to 18% and to the government employees 13%. Maruti has a strong network of sale – 802 retail outlets spread in 555 cities along with 2740 service outlets in 1335 cities.