Maruti Suzuki adapts production strategies for shifting market demands

07 Nov 2023 CW Team

Addressing the diverging demand patterns between utility vehicles and small cars, Maruti Suzuki India Executive Officer Corporate Affairs, Rahul Bharti, explained the need to enhance operational flexibility. He acknowledged that the recent decline in margins was partly due to producing slow-moving cars while facing insufficient production capacity for high-demand vehicles. Bharti emphasised the importance of flexibility in both semiconductor supplies and in-house production to address these challenges.

Currently, Maruti Suzuki India has an installed production capacity of approximately 23 lakh units per annum across its facilities in Haryana and Gujarat. Bharti acknowledged that the initiative to increase flexibility in production operations might incur a small cost, involving a slightly suboptimal production format. He attributed the drop in sales of entry-level cars to disproportionate increases in acquisition costs driven by heightened regulatory measures. Despite these challenges, he expressed hope that income growth catching up with rising costs would eventually lead to a revival in the small car segment.

Bharti also highlighted a 10% reduction in first-time buyers in the market and anticipated a return of this segment when income growth aligns with cost increases and regulatory intensity stabilizes.

Regarding overseas shipments, Bharti disclosed the company's plans to triple its exports volume, aiming to export 7.5 to 8 lakh units annually by 2030-31. He emphasised Maruti Suzuki India's focus on regions like Africa, Latin America, Southeast Asia, and the Middle East, excluding the US and China, solidifying the company's presence in global markets.

Maruti Suzuki India is adapting its production strategies to align with changing market demands, aiming for greater flexibility in response to evolving consumer preferences, revealed a senior company official. The automaker, the largest in the country, is focusing on bolstering the production of high-demand utility vehicles while scaling back the production of entry-level cars. Addressing the diverging demand patterns between utility vehicles and small cars, Maruti Suzuki India Executive Officer Corporate Affairs, Rahul Bharti, explained the need to enhance operational flexibility. He acknowledged that the recent decline in margins was partly due to producing slow-moving cars while facing insufficient production capacity for high-demand vehicles. Bharti emphasised the importance of flexibility in both semiconductor supplies and in-house production to address these challenges. Currently, Maruti Suzuki India has an installed production capacity of approximately 23 lakh units per annum across its facilities in Haryana and Gujarat. Bharti acknowledged that the initiative to increase flexibility in production operations might incur a small cost, involving a slightly suboptimal production format. He attributed the drop in sales of entry-level cars to disproportionate increases in acquisition costs driven by heightened regulatory measures. Despite these challenges, he expressed hope that income growth catching up with rising costs would eventually lead to a revival in the small car segment. Bharti also highlighted a 10% reduction in first-time buyers in the market and anticipated a return of this segment when income growth aligns with cost increases and regulatory intensity stabilizes. Regarding overseas shipments, Bharti disclosed the company's plans to triple its exports volume, aiming to export 7.5 to 8 lakh units annually by 2030-31. He emphasised Maruti Suzuki India's focus on regions like Africa, Latin America, Southeast Asia, and the Middle East, excluding the US and China, solidifying the company's presence in global markets.