Maruti Suzuki’s intention to enter Gujarat may have created a flutter, but the car market leader in India looks to be going slow on the project and will begin construction of factory only in 2013-14.
The slowdown in the domestic car market and Maruti’s own internal targets mean that physical work related to the plant will not happen anytime soon, company MD Shinzo Nakanishi said.
Maruti’s board had cleared a proposal in October to enter Mehsana district in Gujarat, and this was to be the company’s first foray outside home state Haryana where it has two manufacturing locations (at Gurgaon and Manesar).
"We have told the people in Gujarat that start of construction will only happen when we can see 1.8 million units in terms of our annual sales. Going by the present trends in the market and our own forecast, this (1.8 million) looks possible only in 2015-16. Thus, work on the new factory will happen about 2-3 years prior to this and should happen only in 2013-14."
The mood in the company appears to reflect the current pessimism experienced by car industry players as the high interest rates and uncertain economic climate have pushed customers to put off new purchases. The car industry, which had grown a blistering 30 percent last fiscal, has slipped into the negative as sales in the April-December 2011 period have gone down 2 percent.
Asked if this meant going slow on the Gujarat project, he said, "If we think 1.8 million will be hit in 2015-16 , then it is slow of course." The company is expected to invest Rs 18,000 crore in its new facility.