Rs 50,000 crore to fuel Maruti Suzuki India's expansion plans by FY31

Rs 45,000 cr to go towards boosting capacity by 2 mn, says Bhargava

Maruti Suzuki India Limited (MSIL) will invest over Rs 50,000 crore by 2030-31, including Rs 45,000 crore towards doubling its capacity to 4 million vehicles per annum, said R C Bhargava, chairman of the country’s largest carmaker.

Investments will also be made towards the supply chain, and the expansion of export infrastructure (Maruti plans to export 750,000 vehicles by FY31, up from 250,000 currently), and also of the marketing and sales teams, besides supporting vendors. The first unit of the new one million-unit facility in Haryana’s Kharkhoda will kick off production in early 2025. It will have an annual capacity of 250,000 vehicles; similar capacity will be added every year until total capacity of the plant reaches 1 million vehicles. The second plant (annual capacity of 1 million vehicles), the location for which is currently under discussion, is likely to become operational in FY27.

Speaking about the expansion plan, he said: “It takes an investment of Rs 22,000 crore-Rs 23,000 crore to set up a 1 million per annum plant. So you are talking about over Rs 45,000 crore (investment) just for the plants. Besides, investment will be required for expanding sales and marketing, and infrastructure for a big increase in exports, among others. We are finalising the investment plan. It will be well over Rs 50,000 crore.”

The MSIL chairman said the expansion plan is based on the assumption that, on average, there will be growth of 6 per cent-6.5 per cent per annum in vehicle sales until FY31. And, that the number of models will go up from 17 to 27 by FY 31, of which six will be electric vehicles (EV), he explained. The capex plan includes the likely investment towards EV production.

Bhargava further said growth could even hit 7-8 per cent in the next few years if the small car market, which has been stagnant or declining, starts picking up speed again. 

Maruti, Bhargava said, is working out its expansion plan in phases and in such a way that it does not have a large idle capacity in its plants as this may have an impact on its profit.

To meet the rising demand in FY24, he said, Maruti is also using Toyota’s unutilised capacity of 150,000 vehicles per annum. In the first half of FY24, the company planned to further strengthen its annual capacity at Manesar by 100,000 units by tweaking production without adding new lines.

Maruti expects to sell between 2.1 million and 2.2 million cars in FY24, including around 280,000 vehicles for exports. Until FY23, the company was able to cater to demand without requiring further capacity.

Bhargava said that the company is investing in addressing the problem of a mismatch between capacity and models of vehicles that can be made on it. For instance, the lines meant for small cars cannot be shifted to make bigger cars, although the trend in sales is moving towards bigger cars. So, the company is now investing to ensure more flexibility in the lines so that it can manufacture different products on the same line.