Maruti Suzuki, India’s leading automaker, has announced plans for a significant expansion of its product range and production capacity. In a recent regulatory filing, the company unveiled its vision to increase its product offerings from the existing 17 models to an impressive 28. Additionally, Maruti Suzuki aims to expand its total production capacity to a remarkable 40 lakh (4 million) units per annum by the fiscal year 2030-31.
The automaker’s roadmap for growth includes a substantial investment, with an estimated capital expenditure (capex) of approximately ₹1.25 lakh crore, expected to be spread over the next several years. This capex will be vital to support the company’s ambitious expansion plans.
Maruti Suzuki India stated, “The regular capex in the existing plants at Gurgaon, Manesar, and Gujarat will continue. The amount in 2022-23 was around ₹7,500 crore. Total capex till 2030-31 could be as much as ₹1.25 lakh crore.” This investment will be crucial in modernizing and scaling up their manufacturing capabilities.
The company is prepared to allocate around ₹45,000 crores to create the necessary production capacity for an additional 2 million units, considering current costs and allowing for some cost escalation. In line with their expansion strategy, they also recognize the need to strengthen the infrastructure for exporting a larger volume of vehicles and increasing production line flexibility, which will require additional capex.
Maruti Suzuki is not only focusing on conventional Internal Combustion Engine (ICE) cars but is also gearing up for the electric vehicle (EV) and SUV segments. To this end, they plan to invest in the development of 10-11 new models with different fuel options. The production of EVs and SUVs will necessitate substantial capex.
Furthermore, the automaker acknowledges the financial implications of a payout of over ₹12,500 crore for Suzuki Motor Corporation (SMC) shares in Suzuki Motor Gujarat (SMG). This could affect their profits, earnings per share (EPS), and dividend payments while potentially creating a cash shortage.
In preparation for their expansion, Maruti Suzuki recognizes the need to establish an extensive sales, service, and spare parts infrastructure to cater to almost double the domestic sales volumes. This infrastructure will also play a critical role in supporting their export ambitions.
In August of the current year, Maruti Suzuki’s board approved the issuance of shares on a preferential basis to SMC as part of the acquisition of a 100% stake in SMG. Following this acquisition, Suzuki Motor Gujarat (SMG) will become a wholly-owned subsidiary of the company.
The decision to terminate the contract manufacturing agreement with SMG and acquire shares of SMC reflects Maruti Suzuki’s commitment to its expansion strategy and vision for the future of the Indian automotive industry.
