Maruti Udyog Ltd [Get Quote] plans to expand its manufacturing capacity to a million cars by 2010. The passenger car market leader is now in the middle of a Rs 3,000-crore (Rs 30 billion) expansion that will increase its installed capacity from 350,000 units to 450,000 units by the end of 2006 and to 600,000 units in a couple of years.

However, on an annualised basis, its monthly production, due to higher capacity utilisation, is already touching 600,000 units. Reports from the Tokyo Motor Show quoted Maruti's chairman Shinzo Nakanishi as saying that the installed capacity would be increased to a million cars at a cost of about $470 million.

The Maruti Saga

The increase in capacity to a million will be crucial if Maruti is to protect its current market share of about 50 per cent. For, the country's passenger car market is projected to expand to about 2 million units in five years, up from about a million last year.

The company's managing director, Jagdish Khattar, told Business Standard, "On an annualised basis, the Gurgaon plant is already producing 600,000 cars. We have taken up 600 acres at our new site at Manesar in Haryana for future expansion."

Maruti has already undertaken an expansion exercise through a greenfield facility at Manesar.

The company's board, in March this year, cleared an investment of Rs 3,272 crore (Rs 32.72 billion) to produce cars, diesel engines and transmission units at Manesar.