Maruti Suzuki Targets To Make 3 Million Cars Annually By 2025

Maruti Suzuki India is targeting an annual production of 3 million units by 2025 and expects its cost to come down due to a new royalty formula signed with parent Suzuki Motor Corp, Chairman RC Bhargava said.

The contract manufacturing arrangement with Suzuki Motors Gujarat is working very satisfactorily, adding the first line at the Gujarat plant is in full production and the second one will be commissioned early in 2019.

“Work has started on the third line and the expected commissioning is early 2020. We hope that the 2-million mark will be reached in the next financial year,” he said.

Maruti Suzuki India has a production capacity of 15 lakh units per annum at its two plants in Gurgaon and Manesar. The first assembly line of Suzuki-owned Hansalpur (Gujarat) has a capacity of 2.5 lakh units per annum. The second and third lines will also have the same capacity.

On the royalty paid to parent Suzuki Motor Corp, Bhargava said a new formula was signed by the two companies recently.

“The percentage of royalty will now reflect the rising volumes of sales in India and lead to lower costs of production. The growing capability of our engineering department to design vehicles will also lead to the same result,” he said.

The company had said last year that by 2025 it would pay royalty on all models to parent Suzuki Motor Corp in rupee terms. Compact SUV Vitara Brezza is the only model for which it pays royalty in rupees instead of yen.

The royalty payment in rupees is aimed at reducing average royalty rate to 5 percent of net sales compared to 5.6-6 percent for existing models, which were paid in yen.

On the the cooperation between Suzuki Japan and Toyota Motor Corporation, Bhargava said it is another step taken to bring the best of technologies for the benefit of customers and also to promote national objectives.

“Suzuki Motor Corporation is stepping up R&D efforts especially to provide better technologies and products to the company (Maruti Suzuki),” said Managing Director & CEO Kenichi Ayukawa. “The company's R&D centre at Rohtak is also building its capability and we would like to proceed to the next stage ‘Design in India'.”

Ayukawa said after the introduction of the goods and services tax in July 2017, tax on hybrid vehicles increased, resulting in the decline in demand for Maruti's hybrid models.