Maruti Suzuki India Aims to Sell 3 Million Vehicles Annually

After 30 years of selling cars and revolutionising personal transportation in India, Maruti Suzuki is embarking on its next phase of journey with an eye on selling three million vehicles annually.

Spelling out the road map for the next 30 years -- Maruti 2.0 -- Maruti Suzuki India (MSI) Chairman RC Bhargava said the company would be at the forefront of the efforts to make India a significant player in the global market place.

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With an eye on annual sales of two million units in the next five years, MSI is enhancing its research and development capability to increase fuel efficiency of all models, develop eco-friendly vehicles and provide more fuel options of diesel, CNG and LPG in existing models.

It is also developing 800cc compact diesel engines for Indian roads apart from giving special focus on electric vehicles and hybrids.

In his address to shareholders in the annual report FY14, Bhargava said: "2013-14 was a significant milestone year for us, as in December we completed 30 years of selling cars. It is a good time to review what we have achieved and what we should do in our next 30 years ?- Maruti 2.0."

He said the move by MSI to let parent Suzuki Motor Corp (SMC) invest and own the Gujarat plant was keeping in mind the company's future requirements.

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"The much higher availability of funds with Maruti would enable your company to strengthen its R&D and develop, and maintain the much larger number of models required to achieve sales of 3 million cars," he said.

In addition, the company would also be able to invest in strengthening and de-risking its infrastructure for sales, service and spare parts, required to cater to a sale of three million cars a year, Bhargava said without elaborating by when the company expects to touch the annual sales milestone.

In 2013-14, MSI had sold a total of 11,55,041 vehicles.

In January, the company stopped production of the iconic Maruti 800, the car that revolutionised India's automobile industry. The car, produced at the Gurgaon plant, had sold a total of 2.7 million units since its launch in 1983.

Underlining the importance of strengthening R&D, Bhargava said: "If we are thinking of doubling or tripling our volumes, the number of products has to correspondingly go up.

These products will have to be refreshed periodically also.

"The bar of technology, performance and features has to also go up considering the competition in the future. We have to build in-house R&D capability and capacity in line with this need."

The company is investing Rs 2,000 crore at its R&D centre and test course at Rohtak, Haryana, which is SMC's first global R&D centre outside Japan. .

Commenting on the mid-term target, MSI Managing Director and CEO Kenichi Ayukawa said the company would widen its product offerings and enter new segments.

"All our actions need to be assessed in the context of being able to sell two million cars in a globally competitive market and enhanced customer expectations. For instance, while we continue to provide compact cars, we will also enter new segments like SUVs/MUVs with full bandwidth," he said.

MSI will also be open to leverage opportunities in the LCV space, he said adding, "similarly, we will try our own capability with compact diesel engines even if there is little precedence."

With the auto industry seeing signs of revival, Bhargava expressed confidence that the new government under Prime Minister Narendra Modi would help spur growth in the manufacturing sector.

"The Prime Minister has promised the people that Indian manufacturing will revive and will create jobs for the millions of our young men and women. I believe this government has the will, and the skill, to make this happen and manufacturing in India will become increasingly competitive," he said.

Gradually all the impediments to attaining globally competitive operating conditions will go, he added.

"As a company that is already globally competitive, Maruti Suzuki would be at the forefront of this effort to make India a significant player in the global market place," Bhargava said.