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Maruti Suzuki set to ease supply constraints, says chairman R C Bhargava

 

Maruti Suzuki continues to rule passenger vehicle segment

  Maruti Suzuki will ease the supply constraints in top sellers like Baleno and ease the mismatch in demand-supply with cars for sale from the first phase of the new manufacturing facility in Gujarat by February 2017. 

 

In his address to shareholders at the  company's 35th annual general meeting, chairman R C Bhargava said, "Two new products – Baleno and Brezza – were introduced during the year (2015-16) and the response was far ahead of our expectations. It is not good for the company if we continue to be in a situation where products are short of supply. We have to create capacity so that this kind of mismatch doesn't happen to this extent in the future." 

He highlighted the success achieved by the country's largest car maker in the premium segment with products such as the Ciaz. The only limitation which is holding the company from accelerating volumes is capacity constraint. But with the new plant, the company will achieve its target of selling two million units by 2020, he said. This will be a 40 per cent increase over the volumes in FY16.

"This target is fully achievable with the initiatives taken by the company. Expansion of production is required, the Gujarat project is on track and cars from the first line will be available for sale by February 2017," Bhargava informed. 

Exports will be a key driver going forward. Bhargava said, "Baleno has increased our ability to sell cars in Europe and Japan. Exports will play an increasing role as we go forward." Sales of Maruti Suzuki increased by 11.5 per cent in the domestic market to about 1.3 million units. Exports grew marginally by 1.8 per cent.

The company is looking to grow in double digits in the current financial year on account of good monsoons, the Goods and Services Tax being passed by the Parliament and increase in wages of government employees.

He said that one big challenge the industry has faced recently is from the environmental lobby, especially with regard to diesel vehicles. The auto industry too in concerned about air pollution, he said, but western remedies cannot be applied to problems in India. "The health problems which we face are those caused by particulate matters of 2.5 and lower and not NOX (mono-nitrogen oxides). The solutions being suggested will not deliver the results we want. All the restrictions placed on vehicles will certainly affect the industry but not lead to results we want. With government support, hopefully it will be tackled in a much more logical fashion," Bhargava said.