Largest car maker sees no reason for cheer in FY14

Dec 23 2012, 00:00 IST
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SummaryMaruti Suzuki expects growth to remain low at 6%; not to enter premium car segment; to set up second plant in Gujarat with acquisition of 600 acres.

Maruti Suzuki expects car sales to continue to be sluggish in 2013-14 as well, on the back of slowing economic growth and uncertainty on government policies. Top company officials said on Saturday the car market leader will end FY13 with a 6% growth, and is looking at a similar modest rise in FY14.

Maruti chairman RC Bhargava said, “The next year will be very difficult. We don’t see a double-digit growth and 6-7% is the best we can hope for. It’ll be the election year, so no strong initiatives are expected. This year we’ll end with a 6% growth over last year, which wasn’t very great either."

The country’s largest car maker also said it will not enter the premium segment of passenger cars in India and will ‘protect’ its image of a small car manufacturer. The company said it has started spadework to set up its second facility in Gujarat with acquisition of another 600 acres, in addition to its existing plan to invest Rs 4,000 crore for setting up a plant in the state.

“We have land at two locations in Gujarat. The first one is offered by the government and the second one is private land that is directly acquired by us with some negotiations by the government," Bhargava said, adding, “The second location is for our future expansion. Once we exhaust the capacity at the first site, we will move to the second one." He, however, did not share details such as when the firm is likely to start construction at the second site.

When asked if MSI is shifting its focus from Haryana, where it has recently witnessed severe labour unrest, Bhargava said: “We are not moving away from Haryana. We have two plants in the state and are going to Gujarat after utilising the capacity completely at Gurgaon and Manesar. We will do the same once we exhaust the capacity in Gujarat also." He said the company will do the ground breaking ceremony for the Gujarat facility early next year.

Commenting on exports, MSI managing director and CEO Shinzo Nakanishi said MSI is finding it tough due to the decline in European market. “Last year we had a total export of 1.27 lakh units. This year we may be a little less than that because of the slowdown in Europe, which used to be our biggest overseas market."

MSI has been exploring new markets to keep its overseas sales momentum,

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