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Maruti Suzuki's production woes hit sales of Baleno

Production issues of Maruti Suzuki Baleno, a premium hatchback, are unlikely to go away anytime soon, even as consumers who booked the car are forced to wait for half-a-year for delivery.

The country's biggest car manufacturer is facing some severe production constraints with the newly launched Baleno forcing it to juggle output between the hatchback and other models. 

Launched in October last year, volumes of the premium hatchback dipped 41% last month to 6,236 units (lowest since launch) compared to December at 10,572 units, which was the best month for the car.  

The Delhi-based company is running its plants to near full capacity with incremental volumes coming only through improvisations such as debottlenecking. Beyond this, increasing production of any model will mean sacrificing volumes of certain other models. 

“We expect Maruti Suzuki to hit a capacity roadblock this year despite efforts at debottlenecking its stated manufacturing capacity of 1.55 million units. The Gujarat plant is expected to add 0.25 million units of capacity only next year”, said a Religare report. 

While Baleno’s sales have hit MSIL's ageing warhorse Swift, on the other hand, it has maintained a near flat growth in sales last quarter compared to the October-December quarter. 

“There is some cannibalization of the Swift because of the Baleno and vice-versa since they are priced very close to each other”, said a Maruti Suzuki dealer based in city. 

This is true because the premium hatchback segment, comprising six models (Baleno, i20, Jazz, Punto, Polo and i20 Active) has declined during last quarter compared to the October-December quarter. The segment's sales stood at 71,635 units as against 73,661 units, a growth of 3%.    

However, rivals could be cashing in on Baleno's supply bottleneck. Hyundai has been able to grow its volumes and maintain its market share in the premium hatchback segment with the i20, which is available with a much shorter waiting of 15-20 days. 

Rakesh Srivastava, senior vice president (sales and marketing) Hyundai Motor India, “The segment size of the premium hatchback segment has not grown. In that scenario we were able to grow in volumes and held on to our market share of 35%”. 

When asked to comment if the current constraint is unlikely to fade away anytime soon a Maruti Suzuki India spokesperson said, “It is important for us to serve waiting customers as fast as possible, but without any compromise on quality. We do not see any such risk (of rivals eating into Baleno sales). Customers have chosen Baleno and are willing to wait despite being aware of the choices available in the market.”