Suzuki to build small car facility in Japan

Suzuki Motor has raised its annual revenue forecast and announced plans to build a 60 billion yen ($520 million) domestic plant for small cars, as it looks to cash in on a global shift to fuel efficient cars brought on by record-high oil prices.

Suzuki, ranked fourth in sales volume behind local rivals Toyota, Nissan and Honda, said that it would aim for group revenue of three trillion yen this year. At a news conference, Osamu Suzuki, chief executive, said that the automaker would target an increase in profits in line with the higher revenue forecast. The popularity of 660cc minivehicles in Japan and heady growth in India and Europe have helped Suzuki expand at breakneck speed, keeping most of its factories running at full capacity.

With overseas demand for its Swift compact, SX4 crossover and Grand Vitara SUV racing ahead of supply, Suzuki said it would build a 240,000-units-a-year small-car plant in Japan – its first new domestic factory in more than 30 years – to begin production in the fall of 2008. The company said that it intends to boost capacity in Pakistan to 170,000 units in 2009-10 from 110,000 now.

The company has already announced that it plans to raise capacity to 960,000 units in 2009-10 from 630,000 this year at Maruti Udyog. It has also said it would double capacity in Hungary, where it builds the Swift, SX4 and Ignis models, to 300,000 units a year in 2008-09 from 160,000 this year. Combined with the expansion in Japan, Suzuki aims to be making three million cars by the year starting April 2009.

Until new capacity emerges at its global factories, Suzuki said it would reduce production of the less-profitable 660cc minivehicles in Japan by 30,000 units each. By ramping up small-car output by a further 30,000 units next business year, Suzuki said it would aim to achieve a target of bringing domestic small-car sales to 100,000 units in 2008-09, one year ahead of schedule.

In another plan drawn up with profitability in mind, the company said it aimed to cap the ratio of cars it builds for other auto makers at one-tenth of the total three million units to be sold in 2009-10.