Maruti Suzuki, India's largest car maker, in order to infuse life in its car sales, has inked an agreement to purchase diesel engines from the Italian auto company Fiat. Fiat would be providing up to 1 lac diesel engines to Maruti, annually. Going into the specifics of the move, it is believed that using this deal, Maruti would aim at swelling the Swift hatchback output right from the start of 2012.
Few days back, Maruti Chairman R. C. Bhargava said that in view of the frequent jolts given by incessantly rising petrol prices, the demand for diesel cars is ought to go up considerably. However, before striking a deal with Fiat, Maruti, in no way, could meet the heavy demand for diesel-run cars in the market.
It must be noted that during the initials days of November, Maruti Suzuki had upped the diesel car prices by up to Rs. 10,000, in order to use the rising demand for the segment, to its advantage. Moreover the input costs show no signs of exhausting and continue to go up. "We have a waiting list of diesel cars and we have surplus capacity of petrol cars," Bhargava said.
Maruti which recited a completely different story last year, with record sales in India, currently encounters huge competition from global car makers like, Hyundai Motor Co., and Ford Motor Co. Names like General Motors Co. and Honda Motor Co. have also proved lethal for the Maruti saw a nosedive in market share by around 40 per cent.
Every plant of Maruti is capable of producing about 1.5 million cars per year; however, the company is geared up to proliferate one of its existing plants in order to attain a 1.75 million annual capacity figure.
The company is amid the process of purchasing land for setting-up a new factory in Gujarat. However, the commencement of operations at the plant would depend upon the demand situation prevailing in the market.
Maruti, 54.2 per cent owned by Japan's Suzuki Motor Corp. witnesses a decline of more than 50% in the quarterly net profit, proving to be worse than the estimates. As a matter of fact, the car maker has been gripped in the clutches of the labour unrest at Manesar plant for a long time now. Moreover, the ascending interest rates experienced by Asia's third largest economy add fuel to the fires.
Thus, with the recent move undertaken by Maruti Suzuki, the company can look forward to bring its current situation at par with the previous ones, wherein it built and broke its on records.
