February 28 2020
Maruti Suzuki May Double Initial Capacity of Planned Factory
25 August 2012

NEW DELHI—The initial capacity of Maruti Suzuki India Ltd.’s proposed manufacturing plant in India’s Gujarat state could be as much as 500,000 cars a year, double what the company originally envisioned, a senior state government official said.

The expansion plan was discussed when Gujarat Chief Minister Narendra Modi met top executives of Suzuki Motor Corp., Maruti’s parent, in Japan last month, said the state official, who declined to be named. No agreement has been completed, the official said.

Suzuki Motor Chairman Osamu Suzuki, on a weeklong visit to India since Thursday, traveled to Gujarat on Friday to meet Mr. Modi. He is also expected to have visited the site of the new plant at Mehsana—about 100 kilometers (62 miles) from the state’s main city of Ahmedabad.

A spokesman for Maruti declined to comment when asked whether the company would expand the initial capacity of the Gujarat plant. He described Friday’s meeting as a courtesy call by Mr. Suzuki. India is vital for Suzuki as Maruti contributes about a third of the parent company’s pretax profit and accounts for 46% of its overall production outside Japan.

The Gujarat plant will be the first for Maruti outside the northern state of Haryana, where labor strife affected car production at one of its two factories for most of last year. The labor problems turned violent last month, leading to the death of a manager. The violence at the plant at Manesar was the worst since Maruti began selling cars in India in 1983. Its other factory is at Gurgaon. It is investing about 40 billion rupees ($727 million) to build the Gujarat factory, which is scheduled to open in the financial year through March 2016. Maruti, India’s largest car maker by sales, had said previously that the capacity of the Gujarat plant could be eventually increased to two million vehicles a year.

Gujarat is fast emerging as an auto hub, with companies such as General Motors Co., Ford Motor Co. and Tata Motors Ltd. also setting up factories in the state. A plant in Gujarat, which has a long coastline, will allow Maruti to save on logistics costs in shipping its cars to several regions, especially Europe, said analysts. Maruti exports its cars to about 125 countries.

Mr. Suzuki is in India to take a stock of operations at Maruti, and to address the unit’s annual meeting of shareholders on Tuesday.

On Thursday, he met workers at Maruti’s plant in Gurgaon, but skipped the Manesar plant, which reopened this week after a monthlong lockout. The company said at Manesar it has lost 21 production days, output of about 36,000 vehicles and incurred a revenue loss of nearly 14 billion rupees due to the lockout.

The closure of the factory also increased the waiting list on two of Maruti’s highest-selling diesel cars—the Swift hatchback and the Swift Dzire sedan—to 120,000 vehicles



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