Maruti Suzuki wants to restore output of its most popular models in India

Article by Christian Andrei, on July 31, 2012

Maruti Suzuki India Ltd. is looking at its options to bring back the output of its most popular models as persistent labor disputes at one of its plants would intimidate the company's lead in the country. When interviewed, Chairman R.C. Bhargava said that the automaker considers the next 2 to 3 weeks to be critical as it makes the decision on whether it has to move the manufacturing to its other plant in Gurgaon after the riots on July 18 led to the shutdown of its Manesar facility.

Weeks ago, violence erupted at the factory, resulted to a manager’s death. This plant accounts for around 40% of Maruti's output such as DZire sedans and Swift hatchbacks. 

On July 28, the profit of Suzuki Motor Corp. unit fell for the fourth consecutive quarter even before the riot as it contended with a weaker rupee, increasing competition and lessening demand amid the slowest rate of economic expansion in nearly a decade.

Increasing the output in Gurgaon is the key to limiting any erosion in market share and to reviving the earnings growth, according to Deepesh Rathore, managing director at IHS Automotive in New Delhi. Rathore said that putting Manesar back on stream is definitely a priority since Suzuki is presently “crippled.”

Transferring the output to Gurgaon is an option since most of Maruti’s sales are from just the Swift and DZire. Maruti, which produced its first 800 mini hatchback from its Gurgaon plant in the early 1980s, has had its market share fall to around 40%, from 87% in 1998.

Nearest competitor, Hyundai Motor’s share is at 19%, about 15 years after beginning production in the southern city of Chennai. India is the third-largest car market in Asia. [source: Automotive News - sub. required]

Topics: maruti, suzuki

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