Japan’s Suzuki Motor Corp would invest 50 billion yen ($553.8 million) in expanding engine capacity and on research and development in India, its Chairman Osamu Suzuki said on Tuesday.
The total amount, to be spent over two years would be roughly equally split between engines R&D, a spokesman for its Indian unit Maruti Suzuki told reporters.
In August last year, Maruti Suzuki India said it would be investing between 10 and 15 billion rupees on its R&D unit. The company is manufacturing K-series engines, developed specifically for Indian applications, at its plant in Gurgaon near Delhi. The first car to be fitted with this engine was the Ritz hatchback, launched last year.
Engine capacity would expand to 700,000 units over the next two years from the current 500,000 units, the spokesman said. Mr. Osamu Suzuki is in India to mark the roll-out of the millionth car from the Maruti portfolio in 2009/10 and also to lay the foundation for capacity expansion at its plant in Manesar in northern Haryana.
“Taking this success to the 2 million mark is going to be a tough journey,” Suzuki said. “Presently we are seeing a lot of auto companies penetrating the Indian market. We are having severe competition at the moment,” he said.
Maruti, which sells one of every two cars in India, has so far produced 8.8 million cars since its inception in 1983. It faces competition in the compact car segment from carmakers such as General Motors, Volkswagen, Ford, Fiat, while more competition is expected in the future from Nissan, Toyota and Honda.
Small cars, ranging in price from 3,00,000 to 6,00,000 Rupees at the upper end of the segment, make up about 75 percent of the Indian car market.
Germany's Volkswagen AG owns 19.9 percent in Suzuki.