Maruti Suzuki helps Suzuki Motor notch highest-ever overseas production in 2016

It’s rather well known that Maruti Suzuki India is the jewel in Suzuki Motor Corporation’s (SMC) crown. So SMC’s announcement today that its total overseas production volume of 2,151,051 units in 2016 is its highest-ever yet for a calendar year doesn’t come as a major surprise.

The fact of the matter is that Maruti’s production and sales are the bellwether for both SMC and the Indian passenger vehicle market where Maruti commands a 47.32 percent market share. As they say, if Maruti sneezes, both SMC, which holds a 56.21 percent stake in the carmaker, and the Indian PV market catch a cold.

SMC also has PV assembly plants in China, Indonesia, Pakistan, Thailand, Vietnam, Philippines and Hungary. 

Of SMC’s total production of 2,151,051 units in CY2016 (up 102.6% YoY), Maruti Suzuki contributed a record 1,510,959 units or an overwhelming 70.24 percent to SMC annual production numbers. The 12-month period saw Maruti scale a monthly high of 146,046 units in September, indicating that the carmaker enhanced production to feed its over 1,700 dealerships across the country ahead of the festive season of Diwali, which typically sees car buyers open their wallets.

Production during the year had fallen to a low of 89,810 units in in June 2016 (down 5% YoY), when output at the Manesar plant was adversely affected by due to a massive fire on May 30 at air-conditioning equipment supplier Subros’ Manesar plant, which led to a production shutdown at Maruti’s plants at Gurgaon and Manesar for around two-and-a-half days. It is believed that the carmaker which has a combined production of 5,500 units a day, lost production of around 13,000 units. Maruti also saw its June sales fall 10 percent to 92,133 units. But it was not long before Maruti bounced back and July onwards, production numbers stabilised.

Having produced a little over 1.5 million units over the year, Maruti Suzuki India, which has a total manufacturing capacity of 1.5 million units across its Gurgaon (700,000) and Manesar (800,000) plants, has managed to stretch its capacity to the maximum. The past eight-odd months have seen the company juggle production to meet surging consumer demand for the premium Baleno hatchback and also for its first-ever compact SUV, the Vitara Brezza.

Gujarat plant to reduce capacity constraints

Importantly, for Maruti, production constraints will soon be a matter of the past because the SMC-owned new Gujarat plant, which has a capacity of 250,000 units per annum, is slated to commence production on February 1, 2017. Trial production began on January 27.  The second assembly line, with similar 250,000 units capacity and also an engine/transmission plant, will commence production by early 2019, which is when Maruti Suzuki India will have a combined three-plant manufacturing capacity of 2 million vehicles per annum.

It may be recollected that on November 4, 2016, in a surprise move – as a result of robust vehicle sales in India (where it expects sales to rise 9 percent YoY) and Europe (12 percent YoY rise forecast) – SMC enhanced its annual operating profit forecast to 2.4 percent to 2.4 percent to 200 billion yen (US$ 1.9 billion) for the fiscal year April 2016-March 2017. SMC had earlier forecast a fall in profit of 7.8 percent.  

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