The company also plans to introduce at least five new passenger vehicle models next year to drive sales, the people said.(Reuters)
The company also plans to introduce at least five new passenger vehicle models next year to drive sales, the people said.(Reuters)

Maruti targets record production

  • The Suzuki Motor Corp. unit has told its suppliers about its strategies, asking them to ramp up production, the people cited above said on condition of anonymity.
By Malayaban Ghosh
PUBLISHED ON MAR 03, 2021 11:50 PM IST

Maruti Suzuki India Ltd plans to produce 2.4 million vehicles next fiscal, the most in its nearly four decades of operations, said two people directly aware of the plans.

Achieving the ambitious production target will mark a sharp rebound for India’s largest carmaker, which is set to report lower sales for the second straight year in fiscal year 2021 because of disruptions caused by the implementation of new emission and safety norms, followed by the pandemic.

The Suzuki Motor Corp. unit has told its suppliers about its strategies, asking them to ramp up production, the people cited above said on condition of anonymity. The company also plans to introduce at least five new passenger vehicle models next year to drive sales, the people said.

Maruti is hoping that a faster-than-expected economic recovery from the pandemic-induced turmoil and pent-up demand seen since the easing of the lockdown restrictions will sustain next year.

According to the people cited above, the New Delhi-based automaker plans to maintain a daily production run rate of more than 6,700 vehicles, which will take its total tally for FY22 to up to 2.4 million vehicles.

The products that would be launched during the year will include full model change of popular hatchbacks and sport-utility vehicles (SUVs) such as the Celerio, Alto, Baleno and Vitara Brezza, said the people cited above.

Two compact SUVs—Jimny and another model codenamed YTB—are also likely to hit the market next year.

An email sent to a spokesperson for Maruti on 2 March didn’t elicit a response.

Since September, Maruti has been ramping up vehicle production to meet rising demand. In October, it raised production to a record 180,000 units to meet strong festival sales.

Maruti has “guided that 6,750 units will be the average daily output throughout the year, and that takes the count well beyond the 2 million vehicles expected earlier,” said one of the two people cited above, requesting anonymity.

“The management is bullish about the country’s economic recovery and the improvement in customer sentiment after the vaccination drive gathers pace. The shift in personal mobility, following the outbreak also will stay for some time till the pandemic is behind us,” the person added.

Maruti’s production fell 18.7% from a year earlier during the April to January period to 1.07 million vehicles.

This was primarily due to the adverse impact of the strict lockdown that forced the closure of factories as well as showrooms. Production in FY20 declined by 18.1% to 1.41 million units.

Maruti’s total sales, including exports, fell 12.8% from a year earlier in the April to February period to 1.29 million vehicles.

Total sales declined 16.1% last fiscal to 1.56 million.

“The forecast of Maruti’s management is encouraging for the economy as well since the increase in car sales positively impacts every aspect of the economy. If the target is met, then Suzuki will be able to go past FY19 levels after three years, which is great for the industry. Their pipeline looks robust at the moment and will help push retail sales. Hence, the management is confident about next year,” said the second person cited above.

Shaukat Ali, an analyst at Asian Markets Securities, said Maruti has been relying on a narrow product offering in the growing sport-utility vehicle segment, while products from rivals such as Hyundai and Kia continued to show stellar growth and grabbed significant market share.

“As five new MPVs (multi-purpose vehicles) and SUVs are slated to be launched over the next few quarters, Maruti Suzuki is likely to broaden its offering in the burgeoning compact and midsize SUV segment, while retaining its leadership position in the passenger car segment,” he said.

According to India Ratings, improving consumer sentiment following the rollout of coronavirus vaccines, coupled with new model launches, has helped the passenger vehicle segment, in particular, to continue the sequential growth trend in January this year.

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