To take advantage of the inexpensive labour force and currently unutilised capacity at its local subsidiary, Japans Suzuki Motor Corporation is shifting the export base of its popular premium hatchback Swift to India.
Sources said that Maruti Suzuki has, since last month, begun manufacturing the vehicle at its Manesar plant for the West Asian, African and Latin American markets. Earlier, vehicles for these markets were being made in Japan as they were meant for left-hand drive (LHD) traffic. Maruti did not have the capability to manufacture LHD Swift till now.
Suzukis plant in Japan will now produce Swifts for the home market and small export volumes for developed markets that
require a bigger, 1.4-litre petrol engine. In India, the Swift is fitted with 1.2-litre petrol and 1.3-litre diesel engines.
Maruti's Swift is the largest-selling car in India after the Alto, clocking monthly volumes of close to 14,000 units.
However, this is lower than the manufacturing capacity of over 17,000 units a month that Maruti is not able to fully utilise due to sluggish demand in the domestic market. This excess capacity is thus being used for exports.
At present, the Swift is mostly exported as completely knocked-down (CKD) kits to markets like Thailand and Malaysia, with Vietnam to be added by next month. The plan is to now ship completely built-up units.
The LHD version was being made only in Japan apart from Hungary, which makes the European version. But from last month India is producing it for the Latin American, West Asian and African markets and will soon take over from Japan as the major exporter of the model. The LHD version is important since 65% of Africa is LHD and Maruti can now supply there. Till now, the Swift had been exported only as CKD kits, where earnings are lower because final assembly and some value addition happens at the destination, a source close to the development told FE.
Maruti Suzuki did not reply to an emailed questionnaire.
The focus is on emerging markets, but it will take some time to develop these new markets. The idea is to grow in various markets like Colombia and Laos where the company does not have a large presence yet, the person cited earlier said. The company is also looking to enter South Africa in a big way it is 40% of the African car market, the source added.
Manish Sabharwal, CEO