Gujarat, preferred location for new Maruti plant

Top carmaker Maruti Suzuki on Thursday said that Gujarat is a preferred location for the company to set up its new manufacturing plant.

"Gujarat shall be a preferred location to set up a manufacturing plant, but nothing has been finalised yet. We are still exploring the possibilities for our next plant and we have seen sites in Tamil Nadu and Haryana," Maruti Suzuki general manager (west zone) S N Burman told newspersons in Ahmedabad.

"We have been in talks with the Gujarat government and other State governments as well, but no final decision has been taken yet," he said.

Maruti's plant in Manesar (Haryana) can produce 350,000 units annually. The carmaker's three facilities in Gurgaon have a combined annual capacity of 850,000 units.

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Burman was in Ahmedabad to unveil the new version of 'Swift', with an introductory ex-showroom price of Rs 4.43 lakh (Rs 443,000) and Rs 5.29 lakh (Rs 529,000) for petrol and diesel versions, respectively.

Maruti managing director Shinzo Nakanishi and chairman R C Bhargava had met Chief Minister Narendra Modi in May this year and explored possibilities of setting up a plant in Gujarat, which already houses Tata Motors' Nano plant.

The duo had expressed hope that plant location other formalities for Phase-I of the project will get completed in three months and the plant could go on stream in five years.

Through new 'Swift', the company aims to further strengthen its position in the premium hatchback segment.

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"So far we have got 50,000 bookings for Swift, of which 5,000 are from Gujarat. The booking trend reveals that 80 per cent is for diesel version and 20 for petrol against our expectation of 60 and 40 per cent in the two categories, respectively," Burman said.

Eyeing a big chunk of the projected 4.5 million unit car market in India by 2015, the company has proposed to set up another manufacturing plant in the country.

"The estimated volume of Indian car industry is expected at 4.5 million units by 2015. To maintain its market share the company will have to manufacture at least two million units annually, so now we are in an expansion mode," Burman said.

Maruti has decided to ramp up production of 'Swift', which competes with models likes Hyundai's 'i20', Toyota's 'Liva', Ford's 'Figo', General Motors' 'Beat' and 'U-VA' in the premium hatchback category.

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"We shall be increasing the production of the car ('Swift') to about 17,000-18,000 units in the next few months from over 12,000 units currently. This will help us cut down the waiting period for the car," Burman said.

With increased output, the waiting period for the car is expected to come down to 2-3 months from 3-4 months now.

"The company currently has a total annual production capacity of nearly 14-15 lakh (1.4-1.5 million) units," he said.

Maruti not to commit further investments in engines

Maruti would not make further investments in engines till the time an auto-fuel policy was in place, a senior official of the company said.

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"We are not committing any further investments in creating engine capacity unless there is long term auto-fuel policy," Maruti Suzuki managing executive officer Mayank Pareek said.

With the demand tilting heavily in favour of diesel cars in view of the shooting prices of petrol, the company was in a fix on whether to invest in diesel or petrol engines.

"We do not know where to invest whether in diesel or in petrol. This has put Maruti in a fix," he said.

While the demand for diesel cars was 60 per cent across the industry, this had grown to 80 per cent in the last three or four months.

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Maruti's Manesar plant's engine capacity, where the company manufactures Swift and SX4, would be increased to 300,000 from 240,000 by the end of the fiscal.

Pareek said that going by the demand of diesel cars, the Manesar plant's capacity would be exhausted. The company was thinking of outsourcing diesel engines for Swift from the under-utilised capacity of Fiat's plant near Pune.

So far, Swift diesel engines were being made under a licensing agreement with Fiat.

He said it had to be seen whether the engines produced at Fiat plant were suited to be fitted in Maruti cars.

Pareek said with the Indian car market growing up to 5 million in size by 2015, Maruti was keen to capture 50 per cent of the market share.

When asked whether the company was mulling to raise the prices of cars due to rise in input costs, Pareek said that margins were under huge pressure.