Maruti Suzuki India, the country’s largest car manufacturer, has hinted at limiting its exports to concentrate on the growing domestic market, where it is facing increasing competition from a host of new entrants in the small-car space.
In its 2009-10 annual report, the Chairman, Mr R.C. Bhargava, has said: “Maruti Suzuki as a company should perhaps deliberately not attempt to export a large part of its production, but keep exports at about 15 per cent of output. We should concentrate more on the domestic market.”
Last year, the company’s exports at 147,575 units accounted for 14.5 per cent of the total sales of 10,18,365 cars. Maruti Suzuki exports to more than a 100 countries.
Mr Bhargava has said for the company to retain its market share, “not only should we adequately increase manufacturing capacity, but also remain very aware of the changing consumer tastes and demands and be flexible in making quick adjustments.”
China-like boom
Maruti Suzuki’s Managing Director and CEO, Mr Shinzo Nakanishi, has expressed optimism that India’s car market will double in the next five-six years. “There is even an outside chance of a China-like boom in the Indian car market, though there is no unanimity yet among experts,” he has said.
According to the annual report, the passenger vehicle market size in India is comparable to some of the developed economies and ranks seventh globally. The presence of a number of global players, the introduction of technology, features, styling and regulation indicate that the market is gradually attaining maturity. “While all indicators suggest a good growth path for the market, a number of entrants are eyeing the same market,” it points out.
Maruti Suzuki’s share in the domestic passenger cars and vans market stood at 51.7 per cent at the end of 2009-10. In the previous year, its market share was 46.5 per cent. According to data provided by the Society of Indian Automobile Manufacturers, total passenger vehicle sales (cars, utility vehicles and multi-purpose vehicles) were 1,949,776 units in 2009-10 against 1,552,703 in the previous year.
Large investments
Mr Bhargava has highlighted the pressure faced by the component industry to keep up with the rapid growth in automobile sales. Large investments, he says, need to be made to keep up with the growing needs of components. “In addition, the component manufacturers now need to invest in building engineering and R&D capacities. We cannot remain dependant forever on foreign suppliers for component design as this will greatly handicap us in meeting the needs of our customers in reasonable periods of time.”
According to him, the tier-2 and tier-3 vendors will pose problems as their capabilities to invest and improve technology are limited. “The tier-1 vendors have to find a solution to this problem,” Mr Bhargava says and adds that the component industry has the opportunity to move to the next level. According to Mr Nakanishi, the company’s suppliers are working closely with it to expand their management bandwidth and cope with the challenges of scaling up.
