Maruti Suzuki to transform India into a small car hub for global production

Monday 10 December 2012, 12:04 PM by

Suzuki Motor Corporation from Japan wishes to make India into a global small car hub, through the services of Maruti Suzuki India Limited (MSIL). A major reason for this is the appreciating value of the Yen, against foreign currency, which is reducing the profitability. Uncertain conditions can also be observed in Japan due to recent incidents such as tsunamis and earthquakes.

Maruti Suzuki to transform India into a small car hub for global production |
Maruti Suzuki to transform India into a small car hub for global production

Production is set to be ramped up once the new plant starts operating at a place close to Mehsana, Gujarat. This plant is being set up at a cost of Rs 8000 crores, and will be responsible for exporting vehicles to various parts of the world.

The additional advantage for MSIL would be the well developed port infrastructure of Gujarat. Apart from exports, it will also be interesting to see how MSIL handles the local situation in India, where it is currently struggling to meet the rising customer demands. On the other hand, Suzuki Motor Corporation's Japanese division will continue to make cars for their local market.

It also becomes less expensive to source parts from India, rather than from other developed countries. The cost of labour is lower, which thereby helps to incur higher sales. As per Suzuki, taking these advantages forward would help the company in increasing profits. In fact, currently MSIL helps to contribute hugely to the overall car sales of Suzuki. Global majors Nissan and Hyundai already export a large percentage of their vehicles from India to different parts of the world.

Recently, MSIL also announced yet another hike in its vehicle prices on Friday due to fluctuations in currencies. This hike will be applicable to all the vehicles currently manufactured by MSIL which include the entry level Alto and other hatchbacks like Ritz, Swift, Estillo, sedans like DZire, SX4 to multipurpose utility vehicles like Ertiga.

Following in its footsteps, leading auto companies like General Motors (India), Toyota Kirloskar Motors, Volkswagen India, Audi India and BMW India are also considering an increase in prices. “There will be a hike in the prices of our products. The quantum of hike will vary depending on models, but it can be up to Rs 20,000," said Mayank Pareek, Chief Operating Officer (Marketing and Sales), MSIL, as quoted by Press Trust of India.

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