Suzuki plans large scale investment in the Indian market

Friday 16 September 2011, 18:31 PM by

Suzuki Motor has of late shown great inclination towards establishing its operations on the Indian soil. As a result, the company is expected to set up a planned $1.3 billion passenger car facility in Gujarat, which is the current hub of automobile companies in India. A news agency in Japan shared this on Wednesday confirming the plans of the auto maker which is aiming at expanding its capacity in its key market India.

The report regarding the expansion plans have come out just after two days of the car maker expressing its viewpoint over the alliance with Volkswagen stating that it wanted to put an end to its alliance with the car company. However, the tie-up between Suzuki and Volkswagen was seen as a step that would have aided and supported the Europe's biggest car maker idea of expanding in the Indian subcontinent.

Ei Mochizuki, Suzuki's spokesperson said "We haven't come to a decision yet. We plan to announce the location of the plant by the end of October," He told the media that Suzuki has still not come to a final decision regarding its solo entry which aims at expansion in India. He said that Suzuki is quite sincerely mulling over the deal where in Chief Executive Officer, Osamu Suzuki made a visit to Gujarat last week.

Suzuki is a celebrated name in India as it controls about half of the Indian car market through a 54.2 percent stake in the country's largest passenger car maker, Maruti Suzuki India Limited. It is important to consider that if everything works according to the plans, Suzuki would become a much bigger name than before. As it adds capacity in Gujarat, the auto maker will become a part of the league which comprises of a lot of its rivals who are building plants in the business-friendly state, and a place that provides skilled workforce.

As of now, Maruti Suzuki has under its belt, two manufacturing facilities each at Gurgaon and Manesar, both in north India, with total manufacturing capacity of one million cars per year.

Suzuki is expecting to encounter immense competition from rivals that are planning to set up plants in Gujarat. In July, Ford Motor Co said it would build a $900 million production plant at Sanand in Gujarat, doubling its investment in India which is a fast growing market. Earlier this month, PSA Peugeot Citroen announced that it would be investing around 650 million Euros ($933 million) to build a new manufacturing plant in the same city. However, Tata Motors already exists with its Nano plant in Sanand.

Car sales in India, the world's second-fastest growing major auto market positioned just behind China, swelled up to an astounding figure of 30 percent in 2010 to 2011. However, the sales growth has been adversely affected in both July and August. This is the first time in nearly three years that slowdown has gripped the auto market with such an intensity. The reason of the slow pace of growth can be attributed to high interest rates and rising costs hitting demand.

Thus, amidst trouble at the Manesar plant, Maruti Suzuki is ensuring that Gujarat plant result in outcomes that compensate the loss caused due to the unrest.

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