Maruti Suzuki is on the brink of a significant expansion, with its chairman, R. C. Bhargava, indicating that a decision on a fifth manufacturing plant is imminent. This move comes as the company witnesses a robust resurgence in small car sales, directly attributed to the recent Goods and Services Tax (GST) rate reduction. This trend is challenging earlier assumptions about a universal consumer shift towards larger, premium vehicles. Industry observers anticipate that this positive development may lead other manufacturers to re-evaluate their vehicle offerings.
Bhargava confirmed during an earnings conference that the company is finalizing details for the new plant, with an official announcement expected in the coming months. The proposed facility, slated for Gujarat, represents a substantial investment of Rs 35,000 crore. This expansion is crucial for the company’s long-term growth strategy, which previously aimed to double its turnover to approximately Rs 1.68 lakh crore by 2030-31 and achieve an annual production of 40 lakh units. However, the impact of GST is expected to necessitate revisions to these ambitious projections, which are currently being finalized.
Regarding financial performance, Bhargava noted that the second quarter results do not yet fully capture the GST’s influence. He expressed optimism for the latter half of the fiscal year, predicting a significant increase in sales volumes compared to the first half. Supporting this outlook, the entry-level small car segment, including models like the Alto K10, S-presso, Wagon R, and Celerio, has seen its retail sales contribution rise to 20.5% post-GST, up from 16.7% previously. This segment’s revival underscores the ongoing demand for affordable mobility solutions in India.
