To maintain growth and profitability in a slow market, Maruti Suzuki has adopted a multi-pronged export strategy with a focus on non-EU markets to keep its five plants running at maximum capacity. While beating slowdown in the domestic car sales, this will also help utilise its idle manufacturing capacity of over half a million petrol engines.
The market leader also aims to almost double the exports of the Ertiga to Indonesia to 8,000 units by January. A success story in India, the Ertiga is also a runaway hit in Indonesia where multi-purpose vehicles (MPVs) account for over half of the 10 lakh units a year car market. Maruti exports the Ertiga as completely-knocked-down (CKD) kits, which are later assembled at Suzuki’s plant in Indonesia.
“Ertiga’s waiting periods had been growing in Indonesia. Domestic demand is also high. India is the only manufacturing base for the Swift-based MPV. So, as it is launched in more markets, Maruti will gain in terms of revenues from exports,” a Maruti executive said.
Since prices of component and high-grade steel imports have gone up with the weakening rupee, analyst feel the focus on exports for carmakers is important to offset the high cost of imported components.
“From 75,000, we will grow non-EU exports by 30% this year. That is the main focus as the European markets are facing a severe slowdown,” a company official told FE.
Maruti has also begun exporting about 2,000 CKD kits a month of the Swift to Thailand from April. The Swift, probably Suzuki’s most popular product globally, is also made in Hungary and Japan. Meanwhile, the new Dzire, another Suzuki model only made in India, is also being exported aggressively to markets such as Algeria, the Philippines and South America.
Another critical leg of the strategy is engine exports, especially of petrol power plants. The shift in demand has left most carmakers with a huge idle capacity for petrol engines. “We’re exporting the 1-litre K-Series engine to Hungary for use in the Suzuki Splash (Ritz in India),” the official said. In India, the same engine is used across models such as the Alto K10, A-Star, WagonR and the Zen Estilo.
With flat growth in the first half of 2012-13, Maruti now has a very modest projection for the entire fiscal. From a 10% growth projection in April, chairman RC Bhargava said that the target has now been lowered to a 5% growth for