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Maruti mulls limiting exports to focus on domestic market

Faced with increasing competition in the domestic market, Maruti Suzuki India is thinking of limiting exports to 15 per cent of its total output in order to concentrate on meeting requirements in the country.

business Updated: Aug 21, 2010 17:03 IST

Faced with increasing competition in the domestic market, Maruti Suzuki India is thinking of limiting exports to 15 per cent of its total output in order to concentrate on meeting requirements in the country.

"Maruti Suzuki as a company should perhaps deliberately not attempt to export a large part of its production, but keep its exports at about 15 per cent of output," Maruti Suzuki India (MSI) Chairman R C Bhargava wrote to shareholders in its annual report for the year 2009-10.

In fact, during the April-July period this fiscal, the company's car exports stood at 50,558 units out of a total of 3,35,394 units produced, which is about 15 per cent of the total output.

For the whole fiscal 2009-10, MSI exported a total of 1.48 lakh units.

"We should concentrate more on the domestic market. To keep our market share, not only should we adequately increase manufacturing capacity, but also remain very aware of the changing customer tastes and demands and be flexible in making quick adjustments," he added.

MSI currently has two plants, at Gurgaon and Manesar, which have a combined capacity of 10 lakh units annually.

For the first time since it started selling cars, the company saw its market share drop below 50 per cent this fiscal. According to the Society of Indian Automobile Manufacturers (SIAM), the market leader sold 2,82,488 cars during the April-July period, representing a 47.68 per cent share in the overall 5,92,405 units market.

In the comparable year-ago period, MSI had a 53.13 per cent share of the 4,40,069 units car market, with sales of 2,33,811 units.

The firm's loss is mainly due to Tata Motors, Ford India and General Motors India catching up following a good response to their respective small cars -- Nano, Figo and the Beat.

Bhargava also said the company needs to scale up its R&D capabilities for faster launches of new models and face-lifts for the Indian market.

"We need to rapidly develop our own capacity to develop and design products. This is an area of priority for us and with the help of Suzuki, we are investing heavily in research and development," he said.

Expressing similar sentiments, MSI Managing Director and CEO Shinzo Nakanishi said: "Once our R&D Centre at Rohtak comes on stream, we will have enhanced capability to test and evaluate. This will provide us speed and flexibility in launching new models and face-lifts in India."

MSI had increased its spending on R&D to Rs 173.3 crore in 2009-10 from Rs 91 crore in 2008-09.