Passenger vehicle market leader Maruti Suzuki India plans to increase its production and aims to produce 20 lakh units (2 million units) in the ongoing fiscal year with improving availability of semiconductors.
Proof of the company ramping up production is the much-improved production in the first three months of FY2023. Between April-June 2022, Maruti Suzuki produced a total of 454,161 units, up 26% (Q1 FY2022: 361,250). If it accelerates this pace of production, given the surging demand for many of its models, the 2-million units target can easily be crossed by end-March 2023.
In FY2022, Maruti Suzuki manufactured a total of 16,22,331 units, up 15% (FY2021: 14,10,774 units). Last fiscal, as per SIAM sales data, the company sold a total of 15,67,228 units comprising 13,31,558 units (up 2.91%) in the domestic market and 235,670 units (up 148%) for exports.
In his address to company shareholders in the carmaker’s annual report for FY2022, Chairman RC Bhargava said the upcoming midsized Grand Vitara SUV will play a key role in the challenge to touch 2 million units. As per a PTI report, Maruti Suzuki lost out on sales in the first quarter of the fiscal due to the pandemic and production being affected by the shortage of semiconductors, mainly for domestic models.”
According to the chairman’s note, "The number of unmet bookings with the company at the end of the year rose to about 2.7 lakhs," he said, adding MSIL's market share declined to 43.4% from nearly 50% as it lost some opportunity in the domestic market. In FY2022, total domestic passenger vehicle sales were 30,69,499 units versus 27,11,457 units in 2020-21.
Outlook for FY2023
Commenting on the outlook for FY2023, Bhargava said, "The vehicle production would increase as the situation regarding the availability of semiconductors has improved. Your company has also made further improvisations to enhance production. I am exhorting our team to reach 2 million units, though doing that remains a challenge."
Bhargava further said the launch of Grand Vitara, which will be manufactured by Toyota at its Karnataka factory, "is one of the reasons why we are expecting to increase production and challenge 2 million units".
The new SUV will also come with Toyota's strong hybrid technology, which "is the first-time cars with this technology would be manufactured in India", he claimed.
Enhancement of Maruti Suzuki's SUV portfolio is necessary to offset the decline in sales of the non-premium hatchbacks, the core segment of the company, which declined by 5% in FY2022 due to rising costs as compared to FY2021 and were lower by 29% as against FY2019, he added.
"On the other hand, the SUV sector continued to grow. We did not have enough models in this segment to compete effectively, though the situation has now become much better with the launch of the remodelled Brezza and the global launch of Grand Vitara," Bhargava said.
More models are to follow, he said adding, "We are hopeful that MSIL's market share will rapidly increase in the SUV segment."
On electric vehicles (EVs), he said the Gujarat plant of Suzuki Motor Corporation will start production from FY2025 and will be sold by MSIL. "As I had mentioned last year, it will take time for EVs to become the major product in all the segments of the car market. In the period till this change happens, the object of carbon footprint reduction would be facilitated by incentivising the use of CNG, ethanol, biogas and strong hybrids in addition to EVs," he added.
To meet future demands, Bhargava said MSIL has finalised land purchase at Kharkhoda in Haryana for its new manufacturing plant, where it is investing Rs 11,000 crore in the first phase.
"We are giving high priority to expanding production facilities at this site so as to meet future demands. The first unit is planned to be commissioned in 2025 and the second about a year later," he added.
Depending on market conditions, Bhargava said, "... this site has the potential to become one of the largest car manufacturing sites anywhere in the world. The facilities will incorporate the best of technology and generate employment opportunities in the State of Haryana and all over India.