Maruti Suzuki eyes record output of over 2 million

Maruti Suzuki has targeted 25% growth in volumes for the ongoing financial year (FY23) to surpass an output of 2 million, its highest ever in a year.

If the company secures semiconductor chips on time and achieves the target, then it will be the highest growth posted by India's largest carmaker in more than a decade.

The company will introduce new products across price points, from its entry-level hatchback to a premium crossover and a mid-sized sport utility vehicle (SUV), to win back market share and meet the target.

Apart from adding new models, Maruti Suzuki will rely on the CNG offerings in its current portfolio to achieve incremental sales growth.

The maker of the Baleno and Swift hatchbacks is targeting production of 2.08 million for FY23, said several people in the know. This is 26% higher than the 1.65 million units it delivered in FY22.

The target production volume suggests that the company is looking at an average production rate of 174,000 vehicles each month.

When contacted by ET, a spokesperson for Maruti Suzuki said in an email that the company “cannot give any guidance on future volumes or model launches.”

Maruti Suzuki has delivered a compounded annual growth rate (CAGR) of 4% in the last decade. It was only in FY11 that the company was able to post a more than 20% spike in volumes.

The depressed growth rate in the last 10 years was due to a spate of disruptions - from an economic slowdown to regulatory changes that increased the prices of entry level cars, its mainstay, by 30% -- especially in the last three years.

A person who is aware of the company’s thinking said that the underlying demand has been encouraging and has given it the confidence to prepare for production volumes of 2.08 million units, though achieving the target will hinge on improvement in supply of chips.

The company currently has an order book of 326,000 vehicles, equivalent to nearly two months of sales volumes. Despite improving output, the booking momentum is sustaining.

Most of the order bookings have been for the newly launched crossover SUV Ertiga and the Baleno hatchback.

In April, Maruti Suzuki produced 157,392 vehicles. Its average monthly output over the last four months has touched 162,862 units, according to stock exchange filings.

The company is guiding for double-digit growth in production of its bread-and-butter models such as Wagon R, Swift, Baleno, and Vitara Brezza and expects upcoming SUV models to bring in incremental volumes.

It has committed to a capital expenditure of over Rs 5,500 crore during FY23, which will go into addition of new capacity and model launches.

Maruti’s total installed capacity will reach 2.45 million units in FY23, including existing capacity in Gurugram, Manesar and its SMG plant in Gujarat, addition of 250,000 units with the addition of a C plant in SMG and a further 200,000 units from Toyota’s plant in Bidadi. Maruti has a cross-badging arrangement with Toyota.

Parent Suzuki Motor Corp had guided for an at least 11% growth in output out of India recently.