Business IdeasMaruti to expand vehicle prod capacity at Manesar plant
Maruti Suzuki will expand its passenger vehicle production capacity at Manesar by around 2 lakh units over the next 2 years.
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“We will be creating additional vehicle production capacity at our Manesar plant to around 2 lakh units in the first phase, and then consider increasing capacity further to around 3 lakh units,” says RC Bhargava, Chairman of Maruti Suzuki. Currently, the company’s second plant at Manesar, which produces the company’s new models like the Swift, A Star and the Ritz, has a capacity of around 3 lakh units. Last month, the new facility touched the 5 lakh units on a double shift basis.
A company official said the cost of setting up a 1 lakh vehicle production capacity would be around Rs 1500 crores.
The purpose of expanding the Manesar vehicle production facility comes following the company’s decision to stop production of cars at plant 1 located at its Gurgaon production facility. Plant 1 has an annual capacity of around 1.6 lakh vehicle units. There are three plants located inside its giant Gurgaon facility that produce older Maruti models like the Maruti 800, Wagon R, Omni, and the Versa, and one engine manufacturing facility that churns out the K series engine. Total vehicle production capacity at Gurgaon stands around 7 lakh units per annum.
“Since this is the oldest manufacturing facility for the company and all production equipments are almost fully depreciated we would be stopping the production of cars at plant 1 in Gurgaon in a gradual manner. We will not be shifting equipments to Manesar. The space will be used for engine assembling, machining and other works,” says Bhargava. Plant 1 located in Gurgaon is about 40 years old.
Maruti Suzuki currently has a production capacity of 1 million cars per annum. Over a period of time this production capacity will reach 1.2 million cars factoring the proposed 200, 000 vehicle production capacity at Manesar.
The move to increase production capacity comes from two reasons. Maruti Suzuki sold around 733, 000 units of cars both in the domestic and international markets last year. For this year the company’s CEO and managing director, Shinzo Nakanishi expects the company to grow by 10 per cent to sell over 800,000 units of cars. On the export front the company expects to sell over 200,000 units primarily due the good response for its 5 th strategic world car the A Star.