Maruti Suzuki likely to see production loss of 13,000 units

Maruti Suzuki India, the country’s largest carmaker in volume terms, is staring at a production loss of almost 13,000 units by end of day of June 1, if its key vendor Subros Ltd is unable to restore supplies of air-conditioning sets by tomorrow. 

Already Ramesh Suri, chairman of Subros, has indicated that the company is shifting out production items to its two Noida facilities that should be completed in a day or two. This means there will, most likely, be another couple of days of production losses before manufacturing starts at the carmaker’s end. 

It may be recollected that Maruti Suzuki had temporarily discontinued production at both its Gurgaon and Manesar facilities that produce an estimated 5,000 units daily (in two shifts) from half-day on Monday (May 30) due to the fire at the Subros plant in Manesar on May 28 due to a short circuit, fueled by windy condition in the capital.

The suspension of production at both its plants is something that Maruti Suzuki can ill afford at this juncture. If the plants stay idle on June 1, then it could mean lost production of around 13,000 units lost by the end of June 1.

Maruti has recently kick-started the first batch of exports of its new LCV, the Super Carry to South Africa and Tanzania. These are being produced at the Gurgaon plant from March onwards. It is also looking at entering the LCV segment in India in Q2 of this fiscal, which will require freeing up of some additional production capacity before its Gujarat plant goes on stream in early 2017.

Already there are capacity constraints at the carmaker’s end with optimum capacity utilisation reached at both the Gurgaon and Manesar facilities. Earlier today, Osamu Suzuki, chairman of Suzuki Motor Corp, confirmed that the Gujarat plant plan is on track and will roll out production in 2017. So that should come as a breather.

But with the waiting periods of both its new models – the Baleno and Vitara Brezza SUV – receiving a hugely positive response from the market and sending waiting periods spiralling to 7 months for both the models, Maruti Suzuki  must be very concerned.

Already RC Bhargava, chairman of Maruti Suzuki, has told Autocar Professional that vendors were facing a problem in upping capacity at such short notice as the company had not expected such a huge response for the two new models.  Therefore, it would take some time before the capacity could be stepped up as they had made provision for 100,000 units annually for the models initially.

The Vitara Brezza is clocking bookings of 70,000 units with sales of 20,000 units since its launch in March end while the Baleno had crossed bookings of 100,000 units sometime ago with half of them being delivered.

The fire at the Subros factory could not have come at a more inopportune time for Maruti and it will become doubly difficult for it to reduce the waiting periods for its new models, especially with new models lined up for the rest of the year.

Further, a week’s production will again be lost during June when Maruti’s plants close down for maintenance work. Stay tuned for more updates.