Maruti Suzuki India Limited (MSIL), the country's largest passenger car maker, has revealed its intentions to take command on the Indian auto market with a comprehensive 40 per cent market stake by expanding its current diesel engine production. The revelation was made by the company at its Annual General Meeting (AGM).
Announcing its plans at the AGM, R C Bhargava, Chairman of MSIL quoted, “If we want to have 40 per cent of market share, we would have to have more diesel cars and engines. If people are having 80 per cent of their sales in diesel, we cannot be a predominantly petrol car maker.”
According to Society of Indian Automobile Manufacturers (SIAM), MSIL's market share in the Indian passenger car market was poised at 28.61 per cent with consolidated sales of 3,34,288 vehicles between the period April and July 2012.
Speaking on the company's decision on expansion in diesel segment, Bhargava further said, “By 2014, we should have a total capacity of 7 lac diesel engines. We are also examining if we would need more diesel engine capacity after that if the (fuel) policy remains as it is today.”
The Chairman justified the expansive plans of the auto major by citing the massive asymmetry in the petrol and diesel prices, which led to a steep surge in the popularity and demand for diesel vehicles. At the same time, petrol vehicles saw a completely different scenario as their sales were significantly reduced. Considering the effect of this on the sales of MSIL, petrol models have propelled its total vehicle sales, but currently the diesel vehicles are showing immense potential and owing to this, the company is might be making the right move.
Reportedly, MSIL has plans to set up a new diesel engine facility at Gurgaon, Haryana, which has demanded a whopping investment of Rs. 1,700 crore. The facility will begin its manufacturing from 2013 and its initial output is expected to be around 1.5 lacs units. It is believed that the facility will reach its maximum production of 3 lacs units by the year ending 2014. Furthermore, the company has collaborated with Fiat India for sourcing one lac diesel engines and has also fabricated a motion to merge itself with the Suzuki Powertrain India Limited (SPIL). Presently, SPIL will supply 3 lacs diesel engines to Maruti Suzuki.
The Chairman also cited other reasons for the upcoming expansion in diesel market by the company like European market situation is uncertain, fluctuations in the value of rupee and the slack sales in the global and domestic auto markets.
Bhargava acknowledged the current predicament faced by the company and said, “Earlier we were expecting the industry to grow at 10 per cent but it is unlikely now. The current estimate is about 8-8.5 per cent.” He further added, “In the next 2-3 years we should see a significant decline in the forex cost of imports.”
