Small cars in overdrive

Maruti wheels out compact; ups investment to Rs 9,000 cr.

Maruti Udyog Ltd (MUL) will launch a new compact car by 2008-9 and invest an additional Rs 3,000 crore till 2010. Code named A Under(A-), sources said the car would be priced at around Rs 4 lakh with an engine capacity of 1,000-1,200 cc. Nissan is believed to be providing major inputs for this car.

Maruti plans to invest a total of Rs 3,000 crore more "" it has already committed to investing Rs 6,000 crore by the end of the decade "" in its existing facilities at Gurgaon and the new unit at Manesar, including the diesel engine plant.

The proposed Rs 3,000 crore will be distributed between raising the diesel engine capacity at Manesar to 300,000 and increasing the assembly line to 300,000.

Of the 200,000 compact cars to be produced here, 100,000 will be exported under Nissan's name, 50,000 by Suzuki and the rest will be sold in India by Maruti. In addition, it is also upgrading and expanding the Gurgaon plant.

Maruti is also in the final stages of negotiating with Nissan an original equipment maker facility where it will jointly invest Rs 2,500 crore.

The company is investing Rs 4,000 crore in its Gurgaon car manufacturing facility.

The Manesar plant is expected to start production by October 2006. Maruti will make 100,000 Swifts in this facility in the first year.

"The compact car will be exported to various countries in Europe. India is becoming the focal point for us in this area," said Suzuki Motor Corporation Chairman Osamu Suzuki.

Regarding the joint project with Nissan, Suzuki said the two companies were in the process of finalising the project plan and the location of the plant would be decided soon.

He said the joint project with Nissan would be largely an export oriented unit with a capacity of 250,000 cars.

Exports will also be a key area for Maruti's operations. "So far we have been exporting in the range of 50,000 cars and now we are looking at 400,000 exports by 2010," said Suzuki.

According to Suzuki, Maruti, which sold 527,000 cars in 2005-06, is looking at a sales volume of 630,000 cars this financial year.