Capacity boom for carmakers

The Indian car market is booming and the total production has jumped by a whopping 23.4 percent from 3.12 million units at present to 3.85 million.

Recently, India’s largest carmaker – Maruti Suzuki – added another plant to its manufacturing facilities and announced an investment of about Rs 1925 crore for it. According to Osamu Suzuki, chairman and chief executive officer of Suzuki Motor Corp, the company has not been able to supply some car models on time due to capacity constraints.

Maruti is the first Indian automotive company to have sold over a million units in a financial year (2009-10). The carmaker sold 104,791 units in August 2010 posting a growth of 23.6 per cent as compared to August 2009 figures of 84,808 vehicles. Exports of 12,117 units were a part of the figure.

As the western or developed markets are getting saturated most carmakers are looking towards India which has a growing per capita income and good buying capacity. The Indian domestic market with its growth story is attracting lots of new models across segments. Society of Indian Automobile Manufacturers (Siam) puts growth rate of the passenger vehicles segment at 33.88 percent between April-August 2010.

Even Tata Motors Sanand plant is revamping capacity to produce more and more Nanos. The Tata Motors’ sales went up by 50 per cent between April-August 2010.

General Motors too foresees an increase in growth in coming festival season. P Balendran, vice-president at GM India was quoted in the press saying, “At the moment there is no capacity constraint but we are geared to expand if there is a need. The company has a plant in Talegaon that can produce 140,000 cars in three shifts. The other plant at Halol can produce 85,000 cars. Both these plants are running only two shifts at present and can add another shift to increase production at any time. Additionally, Balendran informs, the company can also go for a phase 2 at Talegaon if required.”

Another big manufacturer in the country, Hyundai has no production constraints and expects the festive season to be good for it.

Carmaker Renault-Nissan is expected to have a capacity of 200,000 by end of fiscal 2011 and Toyota will have a capacity of 140,000 units by fiscal 2012.